Peugeot to go it alone despite merger talk

By ALASTAIR SLOANE

PARIS - French carmaker Peugeot is following a road it mapped out for itself some time ago - and it doesn't need another automotive partner to complete the journey.

"We are on the right track," said its publicity director, Paul Alvarez, during the launch of its latest top-end model, the 607.

It had been rumoured that Peugeot and its PSA Group partner, Citroen, might cut a shareware deal with Honda of Japan.

The speculation followed General Motors' share-swap arrangement with Italian carmaker Fiat and DaimlerChrysler's proposed takeover of Japan's Mitsubishi. But Alvarez said the PSA Group already had all the partnerships it needed.

"We have made a partnership with Fiat by sharing platforms on the 806 People Mover and with Renault on engines.

"It is preferable for the PSA Group to have these kinds of partnerships rather than the ones which have shareholding links."

Alvarez said the PSA Group was in a good situation. In 1999 it had 12.7 per cent of a European market that had grown by 5.7 per cent and this year expects to increase its share in Europe and the rest of the world.

In 1998-99 it sold 2.5 million vehicles for 10.4 per cent of the world market. In 2000 it plans to sell 2.7 million vehicles for a similar share. Its turnover in 1998-99 was 247 billion francs, up 12 per cent on 1997-98.

But despite Alvarez's claim that the PSA Group wants to go it alone, rumours of a Honda deal persist.

Peugeot itself has already hinted that it may pull out of Formula One to concentrate on the World Rally Championship with its 206 car. Peugeot also builds V10 engines for the Jordan team.

Honda, the most successful Formula One engine builder ever, re-entered the grand prix industry this year making engines for the BAR team.

Another aspect links the two carmarkers. PSA is the world's biggest producer of diesel car engines and Honda the world's biggest producer of petrol engines.

The diesel car market is expected to grow significantly in the next few years as sophisticated "common rail engines," cleaner-burning and even more economic, come on the market.

And where the diesel goes, so does the PSA Group. Alvarez said: "The HDi [Peugeot's diesel model name] is the engine of the future."