Unlike their US rivals, Europe's automakers don't plan to sell off their supply companies.
Automakers that own suppliers argue that keeping control of suppliers makes good business sense. They can control development of new technologies, better protect assembly lines from supply disruptions - and make money.
But some analysts say automakers such as PSA/Peugeot-Citroen and the Volkswagen group cannot sell off their supply companies for political reasons.
"We always have national interests at stake," said Jochen Siebert, vice president-Europe for CSM Worldwide in Bad Homburg, Germany. "It's difficult for a French company to sell a very large French company. It would create an uproar. It's the single most important reason for PSA not to sell Faurecia."
If Volkswagen were to spin off its internal suppliers, German jobs most likely would be lost. That would not be acceptable to the German state of Lower Saxony, which owns 13.7 percent of VW, said Adam Jonas, an analyst with Morgan Stanley in London.
PSA says it has sound economic reasons for keeping its 71 percent ownership of Faurecia, Europe's second biggest supplier. Faurecia makes seats, cockpits and doors, among other products.
"The market for components is growing fast because cars in general are more equipped than in the past," said a PSA spokeswoman. "Also, it's a good complement to our core business."
Morgan Stanley's Jonas said automakers will keep a components operation in-house if the technology is proprietary or distinguishes their brand.
For example, he said, Faurecia makes diesel particulate filters and Peugeot has diesel engines, so PSA feels it can control patents and be involved earlier in the development process by having ownership in Faurecia.
Another reason automakers keep hold of their partsmakers is to minimize manufacturing risks, Jonas said.
He pointed to Fiat group's purchase of Magneti Marelli, when the supplier was nearly bankrupt, as an example.
CSM's Siebert said automakers don't get clear advantages from owning suppliers unless those suppliers happen to be performing well financially. And in many cases, the reason they're performing well has more to do with external customers than with their owners.
"There are more attractive investments than parts suppliers," he said.
However, two-thirds of Faurecia's sales are to automakers other than PSA and Faurecia represented 15 percent of PSA's 2003 earnings.
John Lawson, an automotive analyst with Citigroup in London, said the financial markets assume no advantage for automakers to own suppliers. He pointed to two perceived disadvantages: confidentiality and access to capital.
"But suppliers have gone to great lengths to satisfy external customers that their plans, projects and information are held with complete confidentiality," he said. "The other handicap: Is the financial structure ensuring that capital is properly allocated throughout the group? In a group that, for instance, is cutting capital spending, there might be poor decisions made with respect to the different parts of the group."
PSA's French rival Renault for several years has employed a strategy of decreasing its ownership in other companies to a minority share. Its last automotive spinoff was in 1998, when it sold the majority of Teksid to Fiat.
Renault has followed the minority-ownership strategy to gain some benefit of the ownership without having to manage the company. That has allowed Renault to focus on its core business, said a company spokesman.
BMW group has joint ownership in a few suppliers that serve only the group and its joint venture partners. BMW group also wholly owns Swindon Pressings, a unit that produces steel and aluminum car body panel components and assemblies for other automakers as well.
In addition, BMW group's plant in Eisenach, Germany, manufactures tools for the group and other auto companies.
DaimlerChrysler doesn't own external suppliers but has three in-house units -- in Untertürkheim, Berlin and Hamburg, Germany. They produce engines, transmissions and axles for Daimler-Chrysler's brands as well as some external customers.