General Motors Company (NYSE:GM) said Friday it sold its stake in France's Peugeot Citroen SA (EPA:UG) for about $343 million, well below the approximately $400 million it paid in March 2012 to get a 7 percent stake in Europe's second-largest carmaker.
The Detroit automaker will record a one-time gain of $150 million on the sale in the fourth quarter.
It’s the European company’s efforts to expand in China that may be playing a role in GM’s exit, though GM insists its alliance will continue. GM Vice Chairman Steve Girsky, in charge of trying to boost GM’s business in Europe, is leaving the company in April and it’s not clear whether GM’s head of European operations, Karl-Thomas Neumann, aims to continue seeking a mutually beneficial alliance with Peugeot as the French company works to expand its relationship with Dongfeng Motors, China’s second-largest auto company.
“We think (Peugeot's) rumored equity sale to Chinese automaker Dongfeng raises intellectual property risks that GM wants to distance itself from,” Morningstar autos analyst David Whiston said in a note Thursday. GM is the second-largest foreign automaker in China, the world’s largest auto market. GM says it has no problems with Peugeot in China, where it operates three factories with Dongfeng.
In last year's fourth quarter, GM reported a $220 million charge related to its alliance with Peugeot, which is reeling from Europe's auto market crisis, a region where the company's 11.2 percent market share continues to shrink, Societe Generale said Friday.
Peugeot has been burning through its cash to the tune of an estimated $2 billion this year as it attempts to recover ground in the market with new premium models and expansion in China.