Peugeot and Mitsubishi on Wednesday said they had abandoned plans to form a <link http: www.ft.com cms s f8c84416-e032-11de-8494-00144feab49a.html bodystrong peugeot and mitsubishi talk of>strategic partnership that would have seen them acquire mutual stakes.
The French and Japanese carmakers gave no reason for their decision, which came after several months of talks and was announced after a meeting of their bosses in Geneva.
Peugeot and Mitsubishi said they still planned to broaden their current co-operation in areas where they already work together.
“Philippe Varin, chief executive of PSA Peugeot Citroën and Osaumu Masuko, president of Mitsubishi Motors have met in Geneva on March 2, on the occasion of the Motor Show,” Mitsubishi said in a statement.
“They confirmed the intent to broaden the current successful co-operation of the two companies. They also concluded that a capitalistic alliance was not appropriate in the current circumstances.”
A Peugeot company insider added: “We have a better financial situation than before, and we don’t want to weaken it.”
The two companies in December said they were discussing extending their relationship.
Peugeot and Mitsubishi jointly produce sport utility vehicles and electric cars, and are building a manufacturing plant in Russia together.
When announcing the talks in December, Peugeot said that alongside a capital tie-up, the two companies were also considering sharing vehicle platforms or working more closely in parts procurement or sales.
Family-controlled Peugeot, Europe’s number two carmaker, has over the past two years held talks with other carmakers including Fiat on forming a fully-fledged alliance. Mitsubishi is one of the global car industry’s smallest mass-market players.
Peugeot, which prides itself on its independence, co-operates on specific cars, engines or plants with – alongside Mitsubishi – Fiat, Ford Motor, BMW, and Toyota.
Amid a broader car industry move toward consolidation, the company said last year that it would consider forming an alliance with another carmaker, but only if the tie-up allowed the group to maintain its independence, fitted in with its strategy and created value.
Peugeot declined further comment on its decision. Analysts had questioned whether the French carmaker, which reported the largest financial loss in its history last year, had enough cash for a large investment in Mitsubishi.
“PSA is losing money, the European market is still in bad shape and it was a big question whether it could generate enough return to justify committing tens of billions of yen to Mitsubishi,” said Koji Endo, a motor analyst at Advanced Research Japan.
Peugeot’s decision is also a big blow for Mitsubishi. The Japanese group is itself unprofitable, debt-ridden and dependent on financial support from other groups in the Mitsubishi family. It had been counting on an injection of capital from PSA to find development of new models and clean up its balance sheet by buying back billions of yen in preferred shares issued to Mitsubishi UFJ Financial, Mitsubishi Heavy Industries and others.
Source: Financial Times
