Report: Peugeot Citroen Looking to Buy Mitsubishi

Report: Peugeot Citroen Looking to Buy Mitsubishi

Europe’s second largest automaker, French company PSA Peugeot Citroen, is considering purchasing Japanese automaker Mitsubishi Motors. News of the possible purchase comes from Nikkei English News, and had Mitsubishi’s shares up 13.4 percent in overseas trading.

A similar report in Bloomberg BusinessWeek reports that Peugeot would take a 53 percent stake in Mitsubishi Motors worth about $3.8 billion, with Mitsu taking a reverse 18 percent stake in the French automaker. This business sharing platform wold be similar to the one that Nissan and Renault engaged in roughly a decade ago when the French automaker bought the then-struggling Nissan.

The combined sales tallies of both companies in 2008 totaled 4.45 million vehicles, which would make any new company the sixth largest automaker in the world.

Some are skeptical of just what Peugeot sees in Mitsubishi, but there are many reasons to suggest why Peugeot is interested. For starters, Mitsubishi certainly has greater expertise in SUVs and crossovers – like the new Outlander GT (pictured above). Next up, this year Mitsubishi became the first automaker in the world to begin sales of an electric car, the iMiEV, and Peugeot is certainly keen on EV technology. Also, the added production output of more electric cars would make for bigger discounts.

Skeptics argue that the biggest problem with the merger is that while Mitsubishi does have a foothold in certain market’s that are foreign to the French automaker, Mitsu’s impact in those markets (like in Noth America) is insignificant. However, a brand like Mitsubishi does have a strong cult-like following, especially amongst performance car nuts, and would be much easier to build on than introducing a French brand.

The more realistic roadblock, however, is likely to be Peugeot’s limited resources having suffered significantly during the recent economic downturn.

The BusinessWeek report does suggest that the talks are ongoing and that a decision could be announced by as early as January.

[Source: BusinessWeek]