Nobody would have thought a couple of years ago that it would require a Chinese automaker to bail out PSA Peugeot Citroen.

The pride of France, once considered the monarch of all it surveyed, found itself on a sticky wicket when its home market in Europe began sinking. As losses began to mount, PSA opted for the tried and tested solutions of shutting down plants and slashing investments but these were temporary cures. An alliance with General Motors followed which ended up heading nowhere till its trusted ally in China, Dongfeng Motor, stepped into the picture and made an equity infusion.

The French government did its bit by investing in PSA too and sent a clear message in the process that the automaker would still remain a homegrown brand. Yet, there is no denying the fact that PSA will now have to chalk out its future with Dongfeng as the pivot. There is really no alternative considering that China is its largest market and Europe does not look as if it will recover in a hurry.

Carlos Tavares, COO of PSA and due to take over the top slot from Philippe Varin shortly, will be relieved that the company is in better shape than what it was some months ago. The former Renault and Nissan veteran will also put all his global experience to good use in plotting PSA’s growth strategy in the coming years with new ally, Dongfeng, in tandem. This would, therefore, mean a greater focus on the Asia-Pacific region (India still remains the million dollar puzzle) and specifically Indonesia and Vietnam. And for those old-timers who long for the good old days when their French brand ruled the roost, they will just have to get used to the new Chinese DNA in its system.

With emerging economies holding the key to automakers’ fortunes in this decade and next, automakers like PSA really have no option but to forge alliances to stay afloat. And China will perhaps end up being the most relevant umbilical chord for a whole lot of them. GM, for instance, manages to clock sales of over three million units in China (which is more than India’s overall output of cars annually) thanks largely to its partner, SAIC Motor Corp. The two had joined hands to attempt and rewrite a similar script for India and ASEAN but the plan died a quiet death.

Volkswagen, likewise, is the top player in China and has earmarked huge investments in the country which is in sharp contrast to its lacklustre presence in India. Geely bought out Volvo Cars and it will be interesting to see how the Chinese automaker maps its global presence. Every other big brand in the global arena, be it BMW, Audi or Daimler, is betting big on China though none of them needs financial support like PSA.

It is not as if Chinese companies are the sole lifelines for carmakers. Fiat, for instance, has bought out Chrysler and the new entity is the seventh largest player in the world. Renault and Nissan have been global allies for over 15 years now and still going strong. PSA had, in fact, explored the option of a Japanese ally in the form of Mitsubishi when it was in better shape but nothing emerged from the talks subsequently.

At one point, GM was the master of equity alliances with stakes in Suzuki, Isuzu and Fiat at different periods of time. There were talks till a decade ago that the American automaker would play a big role in Maruti once the Indian government divested its stake. However, GM bought out Daewoo and bid adieu to Suzuki eventually.

It is not as if all these alliances have been memorable ones. The most disastrous was Daimler-Chrysler though it promised plenty at the time of its creation. Likewise, there was little the German automaker achieved in its equity stakes with Mitsubishi or Hyundai. And, more recently, the partnership that went sour was VW and Suzuki though the former still has not divested its 20 per cent stake in the company. Yet, even while hiccups continue, carmakers have realised that there is really no option but to consolidate. It is the only way to ensure their survival.

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