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France

Algerian state may invest in PSA Peugeot Citroen

Text by Assiya HAMZA

Latest update : 2012-12-14

According to French business daily La Tribune, the Algerian state is in talks with France to invest in troubled French auto giant PSA Peugeot Citroen.

Troubled PSA Peugeot Citroen’s future may lie in a growing closeness between France and its former colony Algeria.

French President François Hollande, keen to promote a business relationship “between equals” is due in Algiers on December 19 for a landmark two-day visit to the former French territory.

That equal partnership is likely to feature the auto industry, in which the Algerian state is desperate to invest, according to French business daily, La Tribune.

For PSA, input from the Algerian state could be a much-needed panacea for Europe’s second-largest car maker, which has been haemorrhaging jobs and seen a year of disastrous sales.

“The subject came up during Hollande’s business envoy Jean-Pierre Raffarin trip to Algeria [in November, to pave the way for Hollande’s visit next week],” La Tribune wrote.

On Wednesday Raffarin, a former conservative prime minister [2002-2005], was clear that discussions on the trip had focused on “bringing Algerian capital to [French] businesses, big and small”, although he denied in a post on Twitter that these had focused on PSA. PSA itself has not responded to La Tribune’s story.

Endless restructuring

But if it is confirmed, Algerian state sponsorship of PSA would be welcomed on both sides of the Mediterranean.

With losses of 819 million euros in the first half of 2012, PSA is going through seemingly endless and painful restructuring in France.

Beyond the closing of its Aulnay-sous-Bois plant near Paris, and shedding 8,000 jobs in France in a restructuring plan announced in July, the company on Tuesday said a further 1,500 retiring workers would not be replaced.

Meanwhile Algeria, which has no auto manufacturing of its own, is a large net importer of French cars.

PSA sold 54,500 vehicles to the North African country in the first ten months of 2012, 93% more than in 2011, putting the manufacturer just behind its main rival Renault, with 75,000 sales there last year.

French rivalries in Algeria

Algerian investment in PSA would be a considerable snub to Renault, PSA’s main French competitor.

“The Algerian authorities have been trying to get Renault manufacturing in Algeria for the last two years,” said Hamid Guemache, founder of the influential Tout sur Algerie (Everything on Algeria) news website.

“When Renault decided to invest in Morocco, it was seen as almost treason. Renault promised to build a factory in Algeria. It couldn’t say ‘no’ because of its position as market leader there. But nothing has come of it.”

Back in Paris, the rumours of Algerian state investment in PSA sent its stock soaring 8.5% on the CAC 40 index when the news broke on Wednesday.

Date created : 2012-12-14

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