As Europe's economy continues to suffer, so do automakers. One of the latest pieces of bad news comes from French carmaker Peugeot
which says it will write down its assets by $5.53 billion. The figure represents almost 29-percent of the company's property, valued at $19.4 billion in June. Peugeot says it will also take a second-half charge of $325 million for "onerous contracts." Speaking of onerous, The Detroit News
notes the "write-downs are more than double Peugeot's current market value." Yipes.
"This calculus results from cautious assumptions about the European economic environment," Chief Financial Officer Jean-Baptiste de Chatillon is quoted as saying in the article. "We think that this European car market will remain affected by the crisis for a long time."
With European auto sales falling the most in almost 20 years, Peugeot executives see little chance of improvement. Peugeot's sales dropped 13 percent in 2012 and Chatillon said markets could fall another 5 percent this year.
Efforts to right the ship include cutting 17 percent of its French workforce, closing a factory near Paris and selling off assets. The French government has offered $9.3 billion in bond guarantees that await European Union review. In addition, an alliance
between General Motors
and Peugeot authored last year was meant to save the two companies $2 billion in annual cost savings and sales improvements over 5 years, but it's currently under review.