It was one of the main talking points of the Frankfurt auto show: Would PSA/Peugeot-Citroen SA help DaimlerChrysler develop a four-seat Smart?
Peugeot was expected to provide DaimlerChrysler's Micro Compact Car with key components such as engines or chassis parts - or perhaps entire platforms - for a future, bigger version of the Smart city car.
Talks between the two groups were disclosed in mid-August by Automotive News Europe and later confirmed by Juergen Hubbert, chief of the Mercedes-Benz and Smart car division, and PSA Chairman Jean-Martin Folz.
Industry watchers wondered if the talks might range beyond components supply and limited joint ventures. There was no official confirmation at Frankfurt, but that has not stopped the speculation.
'One day, DaimlerChrysler will become a predator again,' said a top executive with a major European carmaker. 'It will seek to complete its brand portfolio, and it will realize it lacks a good, generalist brand. In this respect, Peugeot or Fiat could be potential targets.'
VENTURES, NOT MERGERS
But some industry insiders are skeptical about a broad alliance between Peugeot and DaimlerChrysler. Any tie-up would force the Peugeot family to relinquish control of the company it has run for more than a century.
Therefore, 'a takeover bid is practically impossible,' said Patrice Solaro, auto analyst with Julius Baer bank in Paris. 'Anyway, DaimlerChrysler is too big to merge with PSA. Technical agreements are more likely than a merger deal.'
It is also important to look at Peugeot's attitude toward alliances. Since the DaimlerChrysler deal in 1998, Folz has constantly stressed that Peugeot prefers 'limited cooperation' with other carmakers rather than mergers.
Folz often refers to the joint ventures with Fiat in minivans and light commercial vehicles, and with Renault in powertrain development.
But Folz has extended the scope of Peugeot's joint ventures. The latest example is a broad cooperation with Ford in making direct-injection diesel engines. Folz also has outsourced more components to suppliers.
`WE ARE THE GUARANTEE'
Other proposed joint ventures fell through. According to an industry source in France, Citroen held serious talks with Toyota last year about building a four-wheel-drive leisure vehicle in the RAV-4 mold. The two parties could not conclude a deal.
'As long as cooperation is good for the group, we'll practice it,' said Robert Peugeot, executive vice president in charge of innovation and quality. 'We (the family) are the guarantee of PSA's identity.'
Judging by the recent comments of Pierre Peugeot, chairman of PSA's supervisory board, the Peugeot family presents a united front. 'I believe in continuity, because the car industry needs a long-term approach, said Peugeot in a July interview. with Automotive News Europe. 'As far as I am able to, I will make sure that a Peugeot remains chairman of the supervisory board.'