French auto parts supplier GM&S in trouble, PSA refuses further financial aid

According to foreign media reports, the French government asked PSA to provide financial assistance to GM&S before the bankruptcy hearing of French auto parts supplier GM&S on July 19 local time, but PSA refused. The bankruptcy hearing will determine the fate of GM&S. Whether GM&S and its 277 jobs can be saved has become a political focus in France. This issue is seen as the first test of the Macron government in the field of industrial policy.

Bruno Le Maire, the French finance minister who took office in May, is pushing PSA and its rival Renault to donate an initial 5 million euros (38.94 million yuan) in aid, with the French government matching the same amount. Renault has agreed to donate 5 million euros and has additionally pledged to continue placing orders with GM&S for parts worth 50 million euros over the next five years, putting PSA under greater pressure.

Le Maire's office said in a statement on July 17 local time: "PSA has told the finance minister that it does not want to participate in this financial rescue." On July 18 local time, the Paris-based PSA reiterated that it would not exceed the current 60 million euro order commitment within five years, leading to a further stalemate. PSA also plans to invest 4 million euros in its molds at the GM&S factory.

"We have made great efforts to advance this aid package," said a PSA spokesman. "GM&S is in this situation because other customers have cut orders." As evidence, PSA published a July 17 letter in which Alain Martineau, CEO of French auto parts maker GMD, told PSA Chairman Carlos Tavares that the current aid package "is sufficient to support the company's operations."

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