PARIS (Reuters) -- PSA/Peugeot-Citroen unions voiced concern over a deeper tie-up plan with General Motors that sources say the French carmaker is seeking to revive.
Such a move would require major capacity cuts and face serious obstacles, analysts also said.
The discussions may signal that the companies are preparing to tackle overcapacity in their European operations.
PSA and the Peugeot family have repeatedly declined to comment on a Reuters report that the founding family is ready to hand over control in return for a new cash injection from GM.
"A dilution of the family would not be good news," a spokesman for PSA's moderate CFTC union said today. "One of the last remaining family groups would cease to exist in its current form," he said. "It's the family attachment to the company that has preserved its French roots so far."
GM reiterated it had no current plans to invest more cash in PSA. The French carmaker also inconclusively explored a deal with Chinese partner Dongfeng Motor Group, sources have said.
"There's absolutely no question of selling the Peugeot family's stake," a source close to the family was quoted as saying by the Web site of France's BFM radio -- without addressing a capital increase or dilution of their existing shares.
Under the terms of their alliance, which saw GM take a 7 percent PSA stake in a 1 billion euro ($1.3 billion) share issue last year, the companies plan to pool future vehicle programs. But they have so far avoided tough decisions on combining production to generate far greater potential savings.
Opel, GM's German subsidiary, vigorously denied German media reports this week that its next Zafira minivan would be a rebadged version of the Citroen C4 Picasso.
Because of their excess capacity -- with PSA's French factories running at 71 percent and Opel's German plants at 66 percent of maximum output -- the tie-up would require politically unpalatable closures and layoffs.
Such questions would resurface immediately with any deeper combination of their European operations, analysts predicted.
A combination that reduced capacity to current demand levels would eliminate 8,000 to 10,000 jobs at PSA and almost 4,000 at Opel, Metzler Bank analyst Juergen Pieper said, adding that actual cuts would likely stop far short of that.
"An eventual dilution of the Peugeot family seems hard to avoid," Paris brokerage Aurel BGC said in a note. "But deepening the agreement with GM would likely require a guarantee that (more) plant closures and job cuts could be carried out in France."
Morgan Stanley analyst Adam Jonas nevertheless noted "key changes at Opel in the past nine months that may make a deeper collaboration with PSA more realistic."
He cited closures already planned or underway at PSA's Aulnay site near Paris and Opel's Bochum plant in Germany, and new management of the GM brand under Volkswagen veteran Karl-Thomas Neumann.
With their alliance now in its second year, "the two companies should be getting increasingly familiar with each other's systems and processes," Jonas added.