PSA Group could add a new manufacturer to its portfolio

20 March 2019

PSA Group could look to acquire a new vehicle manufacturer following its success with the Opel/Vauxhall brand.

The French firm is looking to expand its footprint outside of Europe now that it has secured the market, with plans to reintroduce the Peugeot brand to the US. The acquisition of another manufacturer with an existing footprint would allow it to move forward its plans rapidly.

Speaking to French publication Les Echos, Robert Peugeot, president of the Peugeot family holding company, said they would back CEO Carlos Tavares and support a new acquisition should the opportunity present itself.

′We supported the Opel project from the start. If another opportunity comes up, we will not be braking, Carlos knows that’ he said, adding that there were no concrete projects at the moment. ′The Opel operation is an exceptional success; we didn’t think that the recovery could be as fast.’

The Peugeot family is one of PSA’s three main shareholders, along with the French Government’s investment bank Bpifrance and China’s Dongfeng Motor. Each has a 12.23% stake.

The Fiat Chrysler Automobiles (FCA) manufacturing group, which includes brands such as Jeep and Alfa Romeo, is often considered to be high on PSA’s shopping list although neither side has commented on the speculation. However, with a strong foothold in the US market through Jeep, it is considered PSA’s best bet to gain traction in the market.

FCA has been the subject of numerous speculated take-over bids, with Chinese firm Great Wall making much noise about acquiring the Jeep brand in 2017, before promptly falling silent again. FCA has since said it is relying on Jeep for profitability, suggesting it will not sell the brand alone. When speaking about PSA’s advances at the Geneva International Motor Show in March, new FCA CEO Mike Manley said the company ′would look at any deal that would make Fiat stronger.’

This was welcomed by Tavares, who is reported to have replied: ′We love to discuss with people who are looking for deals.’

However, should any potential interest in FCA wane, General Motors (GM) and Jaguar Land Rover (JLR) are other options for PSA Group to expand its global market share. GM has vied with Ford for the position of the world’s biggest car manufacturer but no longer operates in Europe, having sold its Opel operation to the French firm. It is strong in the US, however, with brands such as Chevrolet and Cadillac.

JLR could also be an interesting proposition for the PSA Group. The Tata Motors-owned company is currently struggling with poor sales and low profitability although it is in a better state than Opel was when the French carmaker acquired it. Tavares could look at the manufacturer as a further turnaround challenge and doing so would boost both his and PSA’s reputation following Opel’s return to profit in 2018.

Gaining scale would help PSA spread surging development costs for electric and self-driving cars and brace for new competition from technology companies such as Uber and Waymo that are pushing their way into the industry through mobility services.