Peugeot and Mitsubishi plan new 4WD model

28th January 2005, Comments 0 comments

PARIS, Jan 28 (AFP) - PSA Peugeot Citroen and Mitsubishi Motors Corp. signalled Friday they expected to reach a deal next week for Mitsubishi to produce vehicles for the French group.

PARIS, Jan 28 (AFP) - PSA Peugeot Citroen and Mitsubishi Motors Corp. signalled Friday they expected to reach a deal next week for Mitsubishi to produce vehicles for the French group.

Peugeot said it was in "advanced" talks with Mitsubishi to produce a new4x4 (four-wheel-drive) vehicle, marking the French group's entry into the small but booming sport-utility vehicle (SUV) market in Europe.

A deal was expected to be finalised next week during a visit to Japan by Peugeot chief executive Jean-Martin Folz, the company said.

A Peugeot spokesman said that there was "a proposal of cooperation to develop jointly a 4x4; it's not the purchase of parts," but did not provide further details.

Meanwhile, Mitsubishi said Friday it expected to sign a contract with Peugeot early February to provide its passengers cars to the French firm, under an original equipment manufacturer (OEM) arrangement.

Recent press reports in Japan have said that Mitsubishi would start supplying SUVs and other vehicles to Peugeot on an OEM basis from 2006.

The potential contract with Peugeot was cited as the struggling Mitsubishi announced it was seeking JPY 540 billion (EUR 4 billion, USD 5.2 billion) in fresh capital and warned of further losses.

The Japanese company said it had used up nearly JPY 500 billion (EUR 3.7 million) in a previous rescue package to pay off debt.

The company has suffered a sharp sales fall owing to a series of problems over defects in vehicles.

Mitsubishi, the fourth-biggest Japanese carmaker also issued a further profit warning, forecasting a deeper net loss of JPY 472 billion (EUR 3.5 million) for the year to March 2005, compared with the JPY 240 billion (EUR 1.7 million) net loss projected earlier.

A tie-up with Peugeot would follow an already announced deal for Mitsubishi to supply 36,000 mini-vehicles annually on an OEM basis to Nissan, the second-largest car maker in Japan which is 44.4-percent owned by Renault of France.

Investors welcomed news that Peugeot has moved into advanced tie-up talks with Mitsubishi. Shares in Peugeot rose 1.26 percent to EUR 47.28 in midday Paris trading, while the CAC-40 index was up 0.29 points at 3,891.69 points.

Just last week Peugeot's Folz said that Peugeot had "no 4x4 development project, except to find a partner", noting that the development of a SUV model did not seem profitable in Europe at the moment.

"It's true, we're in talks with Mitsubishi as with other groups," Folz said at a news conference with the AJEF association of French economic and business journalists.

He said he did not know when the talks would be concluded and did not plan to disclose the nature of the discussions unless they led to an agreement.

Declining to specify the subjects discussed with Japan's fourth-largest car maker, Folz said: "It's not necessarily 4x4s. There are a lot of other things that Mitsubishi has and that we don't have."

© AFP

Subject: French News

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