What’s Broken With European Automakers?
Last year, European General Motors Co.’s (NYSE:GM) president, Stephen Girsky, was quoted by the Wall Street Journal saying that the company’s new partnership with PSA Peugeot Citroen (PEUGF:PK) would bring about renewed “possibility of realizing projects they wouldn’t have been able to see through alone.” Due to recent events though, Girsky may be eating his hopeful words about the 7 percent stake it took in Citroen.
Citroen warned that smaller than expected savings could be in order, and posted a low third quarter revenue. The decrease in savings from the partnership — $1 billion a year — are reportedly due to the need for review of GM and Citroen’s joint vehicle platform development. According to Yahoo News though, this is just one in a long line of business hiccups Citroen has dealt with, and will likely continue to deal with this year.
The company has expectations of a European market decline of 4 percent, and its losses of almost $0.69 billion during the first half of this year required the company to seek French government aid in the amount of $788.3 million dollars.
Citreon is also planning to let 8,000 workers go in a shutdown of a number of its factories. In a press release, the company explained the decline in the most recent quarter, saying that, “The third quarter of 2013 for the group was impacted by the pricing policy, the interruption in Citroen C3 production and pressure on market shares in Europe,” adding that poor exchange rates also had an effect.
GM is fairing better, despite any difficulty with Citreon. “In the third quarter we were able to attract more consumers to the brand thanks in large part to the launches of several new vehicles including the Corvette, Silverado, and Spark EV,” said GM’s Alan Batey, according to the Wall Street Journal. The auto industry rebound in the United States is undoubtedly a relief for car companies like GM who have Europe’s downtrend on their plates.
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