French car sales plummet as Peugeot-GM venture disappoints
PARIS, March 2 — New car sales in France plunged by an annualised 20.2 per cent in February, industry data showed yesterday, with the worst falls recorded by PSA Peugeot Citroen whose announced tie-up with General Motors pushed PSA shares down.
Ratings agency Moody’s downgraded the PSA group one notch to non-investment status, warning that similar alliances in the motoring sector often failed to match expectations.
Moody’s slapped Peugeot with a Ba3 rating and a negative outlook based on poor earnings while adding that previous mergers and alliances “have often not resulted in the anticipated competitive advantage and improved performance”.
Peugeot sales in February plummeted by 29.2 per cent while fellow French car maker Renault had sales drop 28.5 per cent.
The sharp drop is in large part explained by strong sales a year earlier fuelled by a French “cash-for-clunkers” scheme that subsidised new-car purchases to boost the motoring sector.
Sales in February by foreign car makers were stronger, falling only 7.3 per cent overall, with some companies — such as Japan’s Nissan, BMW of Germany and South Korea’s Hyundai — showing growth.
But sales from General Motors fell by 25.7 per cent to 7,819 cars.
The drop in new-car registrations should continue in March, CCFA warned, and the committee has forecast a total market contraction of 7-10 per cent for this year.
On Wednesday GM and Peugeot — Europe’s No. 2 car maker — said they would form a global partnership, with GM taking a 7 per cent stake in the French company through a reported €1-billion increase in capital.
The two companies agreed to share vehicle platforms and create a joint venture to purchase commodities and other goods and services. They targeted US$2 billion (RM6 billion) in annual savings within five years from the alliance.
Peugeot’s share price sank by more than 5.0 per cent yesterday in a largely flat Paris market, with traders focused on the capital increase caused by the venture instead of any potential synergies.
“The share price is suffering because of the capital increase that will dilute the shares and (traders) are ignoring the good news for the moment,” Deutsche Bank analyst Gaeten Toulemonde said.
Motor manufacturers have struggled with flagging sales in Europe, where the euro-zone debt crisis has brought on recession and a sharp slowdown in demand for vehicles.
Thousands of workers at a Peugeot factory north of Paris were temporarily laid off this week as the company looks to avoid stockpiling as demand dwindles.
Hundreds of workers at a Renault factory west of Paris marched and blocked traffic on Wednesday demanding salary increases, but Renault said its hands were tied by the deteriorating vehicle market. — AFP