French carmaker PSA Peugeot Citroen has unveiled a 3 billion euro capital tie-up with China's Dongfeng. Ivor Bennett asks if the cash injection will buy enough time for a recovery after losing another 2.32 billion in 2013.
REPORTER: It really is the end of an era for Peugeot. 200 years of family ownership finally coming to a close. A sad moment? Not at all. Outgoing CEO Philippe Varin.
PHILIPPE VARIN, CEO, PSA PEUGEOT CITROEN: "Things have changed a lot since I became CEO of the company. We have gone through an unprecedented crisis in Europe. The market has been down 25 percent on the last 5 years, and the good news is, that with this deal and the project, we are back on the attack."
REPORTER: The 3-billion-euro deal sees Chinese carmaker Dongfeng in the driving seat, along with the French state, both stumping up 800 million euros for 14 percent stakes, matching the Peugeot family's reduced holding. Recent results suggest the company had little choice. A 2.3-billion-euro loss last year, 5 billion the year before. Peugeot wasn't just in reverse, but fast running out of gas. Luke Madden is deputy news editor at car magazine Auto Express.
LUKE MADDEN, DEPUTY NEWS EDITOR, AUTO EXPRESS: "It seems like they've almost invested themselves into a bit of a hole. I mean they've got some great product coming out but the damage has almost already been done, and sales in Europe aren't as good as people were expecting. So they've got this great product but no one necessarily wants to buy it, because they can't afford it."
REPORTER: Firm French favourites, Peugeot and Citroen have long been known for their innovative styles - each model possessing a certain je ne sais quoi. There are concerns that could now disappear. But Asian tie-ups are nothing new, and past experience suggests the benefits far outweigh the risks. Jaguar Land Rover posted an 800-million-pound profit in the third quarter last year - its takeover by India's Tata Group bringing unparalleled exposure to lucrative new markets. Volvo's a similar story - the Swedish firm's aiming to double sales by 2020 thanks to its deal with China's Geely.
LUKE MADDEN, DEPUTY NEWS EDITOR, AUTO EXPRESS: "I think we probably will see more of these tie-ups in the future just because they are actually working quite well here. You're not sacrificing anything of the brand, you're getting investment in new products, so, yeah, it seems win-win. And it's not just China, there are markets like Vietnam and Malaysia, they're up and coming. So there's a lot of growth still to come from there."
REPORTER: Peugeot's hoping to triple sales by 2020 thanks to the deal, as well as generate a 400-million-euro saving. Unions fear job losses but for the market, it was a sigh of relief - the company's shares jumping as much as 9 percent. The end of an era maybe, but not the end of the road.
IDIOMS AND WORDPLAY
1. If a car stalls, it stops suddenly because of a lack of power or speed. This verb can also be used figuratively to refer to the economy or a company, as here. • Brazil's economy has stalled in the last few years, despite huge investment in the upcoming World Cup.
2. If you kickstart a motorcycle, you start it by pushing down a lever with your foot. Used figuratively, it means to do something to help a process or project start more quickly. • The government's attempt to kick-start the economy has failed.
3. If someone is in the driving seat, they are in control of a situation.
4. If a car is in reverse, it is in reverse gear and going backwards. The same can be said about a company or economy. • Spain's economy is in reverse again.
5. If a car runs out of gas, it has no gas (= petrol) left. Used figuratively, the expression means to lose energy and stop doing something, or do it less well. • The economic growth for the region seems to have run out of gas.
6. The end of the road is the point at which something can no longer continue in the same way. • The end of the road is nigh and Land Rover will be calling time on the car at the end of 2015.