French auto group PSA Peugeot Citroen has reported a 13 per cent fall in its first-half global car sales and its shares dropped 6.51 per cent to €7.17.

The future of the group looks gloomy

The group, which has tied up with US giant General Motors, is in financial difficulties and is expected to announce restructuring measures.

The government is expected to announce action to help the French auto sector this week.

At Global Equities, broker Xavier de Villepion said: “The future of the group is gloomy.”

The alliance with GM, announced at the end of February, had come late in the day, given PSA’s poor state, he said.

A spokesman for the group said that it had not asked the French state for a loan.

He was responding to remarks by the coordinator of a recent review of the group, Philippe Bonnin, who had said that PSA wanted such a loan.

At Citigroup, analysts said that the latest sales figures were disappointing but had been expected.

“What worries us most regarding PSA is the state of its cash holdings, and this could affect its credibility with credit rating agencies and make financing more difficult,” the Citi analysts said.

The capital of the company is controlled by the Peugeot family. General Motors owns seven per cent since the alliance.

PSA, the biggest French automaker ahead of Renault and second-biggest in Europe after the VW group, reported that in the first half of the year it had sold 1.62 million vehicles, either complete or in kits for assembly.

It blamed the fall in sales on weak conditions on European markets and the halting of its activities in Iran owing to the effects of sanctions.

Sales in Europe fell by 18 per cent to 980,000 cars and commercial vehicles, and the firm’s share of the market fell to 12.9 per cent from 13.9 per cent.

PSA underscored that “the markets which are usually the best – France, Spain and Italy – are in deep crisis.”

Sales outside Europe rose with the exception of a 21 per cent fall in Latin America to 122,000 vehicles.

Sales in Russia rose by 17 per cent to 41,000 vehicles, and in China by seven per cent to 209,000. Sales rose by 12 per cent to 124,000 vehicles in the rest of the world.

PSA achieved 39 per cent of its sales outside Europe from 38 per cent in the first half of last year.

The group was hit by a fall of 31.3 per cent in sales of kits, mainly for Iran.

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