Mitsubishi May Not Be what PSA Needs

No need to worry, PSA is not in trouble, but it could be pretty soon. The French automakers want to get a piece of all the action that’s been happening in Asia. PSA, which is mainly concentrated on the European market, decided to make a deal with Mitsubishi, in order to get access to the Asian market through its dealership network. As far as this deal goes, analysts seem to think this might not be the best alternative for PSA.

"Peugeot's issues aren't easy ones to fix -- it's not just a matter of a cost-cutting program here and there," said Credit Suisse analyst Stuart Pearson. "It lacks scale and it's too Eurocentric. That can be painful and expensive to fix," he added, warning that "buying into Mitsubishi could be an expensive way to fix it."

This deal seems to be nothing like the 10-year deal between Renault and Nissan, as Mitsubishi is believed to be nothing like Nissan.

"Nissan is in a much better strategic and financial position than Mitsubishi," said Morgan Stanley analyst Adam Jonas. "Mitsubishi is a shadow of what Nissan is, or even what Nissan was, in terms of market position."

"Mitsubishi makes fewer than a million cars a year. It's a well-managed company but its market positions in every single market from Japan to the U.S. to Latin America, everywhere, are very, very weak," said Jonas.

Based on production for the first 10 months of the year, Mitsubishi is ranked seventh out of Japan's eight carmakers.