Tata Motors has denied that the company is in talks to set up an alliance with the Peugeot Citroen. Germany’s Manager Magazin earlier reported that Peugeot Chief Executive, Philippe Varin is finding an alternative for cooperation with General Motors and its European Opel division collapse, citing unnamed company sources. While a Peugeot spokesman said they are still not commenting on the countless rumors about the group. Some reports say that GM and Peugeot have halted talks on a deeper tie-up amid misgivings about the French carmaker’s worsening finances and government-backed bailout.
Manager Magazin report shows increase in Peugeot’s shares as much as 3.3 percent before giving up most of their gains after Tata Motors’ denial. The stock was trading at 4.47 Euros. Peugeot is burning 160 million Euros of cash a month and is scrapping 10,000 jobs and a domestic plant. General Motors predicts European losses of $1.5-1.8 billion this year and is in union talks to close an Opel factory in Bochum, Germany. The deal also includes GM paying $400 million for a 7 percent stake in its troubled French partner. Peugeot has sacrificed other relationships and markets to pursue the broader GM alliance, which is now falling short of early expectations.
The French car maker blamed financing problems for its February decision to halt sales in Iran – the Peugeot brand’s second-biggest market, but GM told investors its new partner had promised to exit the country. Peugeot had also flagged plans to build cars with GM in India and seek a partner to develop rechargeable hybrids, but GM said it was not interested in any of these projects. Peugeot has withdrawn Indian entry plans after narrowing down on Gujarat for a manufacturing facility.