General Motors bought a seven-percent stake in Peugeot earlier this year for €320 million ($430M U.S.), the obvious aim being the $2 billion in savings from synergies like shared platforms, components and joint purchasing power. Yet the trouble that made the partnership worthwhile for Peugeot has only got worse since the agreement was signed: it had to issue stock for GM to buy, depressing its share price. It later sold its Paris headquarters to raise money, but its plan to cut jobs and reduce overcapacity – the European industry's number one bugbear – has been repeatedly nixed by the French government. According to reports, Peugeot is losing more than $200 million every month and the government's new plan to help it sell more cars is of dubious near-term value.

According to Reuters, those developments have had a deleterious effect on Peugeot's stock price, and by extension, the value of GM's stake. What cost The General €320M four months ago is now worth €146M ($180M U.S.), leading GM to consider taking an impairment charge on the loss of value. GM feels the situation is temporary and that the price will recover as the European industry picks up, and to be fair, analysts and other observers also expect things to recover – predictions have ranged from late next year to the next two years, but no one knows when. GM has only said that if the situation doesn't change in the "near-term," it will take the charge but hold onto the stake "until its fair value recovers."


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  • 13 Comments
      Sir Duke
      • 2 Years Ago
      NewsFlash: European financial crisis is not short term. Japan in the 1990s struggled through the lost decade, and that was a single country, speaking with a single voice, working towards a single goal. Recovery for Europe is going to be much tougher, because every country is lobbying in their own best interest. The wealthier countries are preaching austerity, while tightly clutching their purses, the poorer EU countries are pleading mercy. Chances are the wealthier countries which has a lot of influence over the World Bank and IMF will get their way. This will have devastating effect on the growth of these economies, which will in turn come back to bite the wealthier countries in the ass. Dear Economic geniuses of the world. Rich folks get rich by selling crap to poor folks, or stealing from poor folks. If the poor has nothing with which to buy the crap you are selling, you are the eventual loser. Likewise, if the poor has no money for you to scam or steal, you'll soon have to start stealing from each other. This is how WARS get started. Alas, once again, the poor gets screwed, because they are the ones who end up fighting and dying in these wars. I wonder what would have happened if the US had just walked away from the rubble that was Europe, after WW2, No Marshall Plan. How would that have turned out?
        Big Squid
        • 2 Years Ago
        @Sir Duke
        Poor countries are poor because they spend too damn much. They have to borrow this money from rich people, and pay it back with interest, which puts them further in the hole.
      lrx301
      • 2 Years Ago
      It is not surprise. They'll do this kind of stupid things repeatly until the next melt-down. It is deep in the General's DNA.
      Diz
      • 2 Years Ago
      Why, it's almost as if everything they touch turns to s*it!?! A government run American car company/French government run car company are having problems? Who'd a thunk it?
      Peter Foglia
      • 2 Years Ago
      Who ever approved GM buying Peugeot shares in the first place? Duh...!? Way to go, Government Motors, using taxpayer's money to buy more junk. Thanks! For nothing.
      throwback
      • 2 Years Ago
      A write down already? Shades of GM/Fiat all over again.
      • 2 Years Ago
      [blocked]
      Big Squid
      • 2 Years Ago
      Zombie lion want brains
      techie69
      • 2 Years Ago
      With what money?
      Michael Scherping
      • 2 Years Ago
      Perhaps GM embracing their French roots wasn't the best plan after-all. PSA should have searched every possible deal out there that would have landed them in the continental USA selling their Peugeot and Citroen Brands here. GM will no doubt block them from ever acheiving that because GM doesn't want to loose more market share to a foreigner. PSA should have made deals with Mazda, SAAB, Mitsubishi, or some other company with an American dealer network and desperate for showroom traffic.
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