Feb. 8 - Peugeot’s writedown is not the end of its troubles, says Reuters Breakingviews, and the outlook for French carmaker’s outlook remains bleak. A bailout may be on the cards.
The pleasure of traveling may soon need a bailout even off the writing down a book value response by more than four billion euros and says breaking news joining me is ever Hamas. I'm that -- Paris -- to this summer but I'm a bit there's there's the the right down there's this this talk of the French government may be taking a stake. As the GM alliance. And then this traders -- analysts saying -- crashed just make it. The difference in the cash position because it doesn't involve cash for their case all of those things are true what started the beginning. She has a troubled company. Which is not surprising because it has relatively high concentration in Europe. For among all the carmakers and its concentration is in the weakest markets Spain Italy and France. That's been true for years that has led to you a very large cash burn so they're losing money and their position looks pretty precarious. That in turn has led to an accounting write down they've written down a chunk of their assets. On the theory that right now and -- profitable and the French accounting watchdog. As I'm said you must protect your assets if not really profitable so that the return on assets is appropriate. So so far so good the only problem is. That that cash burn and that we position means that there actually. Likely to be in trouble. And then we get back to the GM alliance. So how are they gonna get out of trouble well -- two sources of help. One is General Motors where they have an alliance in several parts of the world and the others French government. The French government taxing is that they said look to talk about taking a state is not on the agenda that so that's what we have got to say that the same time the budget minister mrs. acquired. Think this company must not and cannot disappear and we must do what it takes this company to supply. Again I get -- backing -- -- -- they will get the backing if they needed but I suspect that the you'll also have something to say about it. And suit I think we will end up with a triumph that is to say different will be able to say our car company has survived. But quite likely much smaller combined I'm quite possibly with GM's Opel division in Europe. The problem in Europe is very -- yet this too much capacity exactly and I think you know having spoken to a number of of water and make its recently who wrong. Trying to make way in this market. -- -- admission that this market is gonna remain tough even off that's when fifteen is the one -- market. Yeah I mean everyone knows that it's good -- the Peters should say it it means that probably were getting a bit closer to this thing that's been. Well I've been watching this market since 1989. And I think for more than half that time there's been a problem with surplus capacity low profits for the utilization. -- prices. And there's just a problem of no one wanting to be the first cut out production it. And at some point this will happen to French government's attitude that we need to French car companies is in huge amount -- the line goes from strength to strength. On the other line crippled. Reforms and it's Paul runs for a -- Weakness to weakness should be an appetizer -- that is the arthritic lion. That the you'll know why we're doing don't match the offer dateline all right -- -- off of that Edward had us. Breaking news if you're watching you show every day twelve studies and seventeen Teddy GMC -- problems Royces.