PARIS--PSA Peugeot Citroën and China's Dongfeng Motor Group Co.
plan to launch two to three new models a year, with the French car
maker licensing some of its technology to its Chinese partner on a
nonexclusive basis, Peugeot said Wednesday as it reported a
narrower net loss for 2013.
Peugeot Citroën, badly mauled by the six-year slump in
automobile sales in Europe, is embarking on a new era in its
development as it seeks to escape from Europe's stagnating market
and expand its operations in Asia and other faster-growing emerging
markets.
Europe's second-largest automotive group plans to raise EUR3
billion (US$4 billion) in fresh capital that will allow Dongfeng
and the French state to acquire shareholdings of 14% in the
company, it said in a statement. The Peugeot family that has been
at the helm of the company in its various forms for two centuries
will no longer have a blocking minority and will see its stake
reduced to the same level as the state and Dongfeng.
Peugeot's board approved the deal on Tuesday.
Among other things, Peugeot is eager to develop its innovative
Hybrid Air drivetrain that uses compressed air to drive electric
motors. Dongfeng is particularly interested in that technology
which is cheaper than current battery-powered electric vehicle
systems and is well-adapted for use in countries without a charging
infrastructure.
More than two-thirds of the growth in the world's automotive
sales in the coming years is expected to come from Asia, French
Finance Minister Pierre Moscovici said Wednesday.
Peugeot said that its existing alliance with General Motors Co
of the U.S. is still expected to generate additional growth and
synergies estimated at $1.2 billion by 2018, shared equally by the
two partners. For now, the main synergies come from a joint
purchasing arrangement that is ramping up progressively as new
projects come on line. But the synergies objective remains well
below the $2 billion that the two companies originally
targeted.
Deepening its 20-year-old alliance with Dongfeng in China and
Southeast Asia should generate cost savings and revenue gains of
EUR400 million a year for Peugeot by the early 2020s, the French
company said. The two companies are aiming to triple the sales of
their Chinese joint venture Dongfeng Peugeot Citroën Automobiles to
1.5 million vehicles that for now will be made in China but will
eventually be exported to markets in the rest of Asia or other new
markets, chief financial officer Jean-Baptiste de Chatillon said in
a conference call.
Mr. de Chatillon said the vehicles exported from China will
initially be either fully built-up or in kit form for local
assembly. He said the alliance could envisage full assembly plants
in other countries at a later stage if market conditions warrant
it.
Peugeot, which has been consuming cash at an unsustainable rate
in recent years, said it had managed to reduce its cash burn in
2013 to EUR426 million, a much better performance than the
company's original guidance that it would at least halve the EUR3
billion cash burn recorded in 2012. It said it is aiming to become
cash-positive by 2016 "at the latest."
The company posted a net loss of EUR2.32 billion for 2013, less
than half the EUR5.01 billion loss in 2012 that was chiefly due to
a EUR3 billion charge for asset impairments. The company said its
recurring operating loss shrank to EUR177 million last year from
EUR560 million in 2012, despite a 2.4% fall in revenue to EUR54.09
billion that reflected a 4.9% drop in the company's global vehicle
sales last year.
Peugeot also confirmed that its in-house banking unit Banque PSA
Finance and Spain's Banco Santander have entered into exclusive
negotiations to form a 50-50 partnership to develop the French
bank's activities in Europe.
Write to David Pearson at david.pearson@wsj.com
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