By Ben Klayman
NEW YORK (Reuters) - General Motors Co <GM.N>, which has been seeking to fix its ailing European operations, believes a crucial partnership in France would survive even if the French partner ties up with China's Dongfeng Motor Group Co Ltd <0489.HK>, a top GM executive said on Friday.
Reuters reported in June that the founding family of PSA Peugeot Citroen <PEUP.PA> had offered to give up control of the automaker as it tried to revive plans for a closer tie-up with GM backed by a fresh capital injection.
"We're not PSA's only partner ... so I don't think it would complicate our situation any more than it would complicate some of their other partners," GM Vice Chairman Steve Girsky told Reuters in an interview in New York, referring to a possible partnership between Peugeot and Dongfeng.
He acknowledged that the impact of such a tie-up on GM's alliance with Peugeot would depend on how much influence Dongfeng had. He said another factor would be whether any vehicles in such a partnership would be sold in China, where GM's joint venture partner is SAIC Motor Corp <600104.SS>.
Peugeot had also held inconclusive discussions about selling a stake to a Dongfeng-led consortium, sources said in June.
GM has so far refused to invest more money in Peugeot, a stance Girsky reaffirmed on Friday. GM is Peugeot's second-largest shareholder behind the Peugeot family.
"We bought our 7 percent in the first place not because we wanted significant influence in PSA, but because we wanted to help them with their capital raise at the time," he said.
Girsky said Peugeot has not raised the issue with GM and he declined to say whether the U.S. automaker would be willing to have its stake in PSA diluted.
"We haven't had discussions. We don't know what they're going to do, and when they decide what they're going to do, they'll pick up the phone and call us."
STRENGTHENING THE BRAND
Girsky said fixing GM's European operations is the priority and the alliance with Peugeot is meant to help. GM and PSA are still working together to build two minivan-like vehicles on the same vehicle platforms, starting in 2016, but other unidentified products largely for the European markets are also being discussed, he said.
GM's money-losing European unit has been a key focus for investors since the automaker went public in the fall of 2010 following a bankruptcy reorganization and a $49.5 billion U.S. government bailout. In November 2011, Chief Executive Dan Akerson charged Girsky with overhauling the European operations, which have suffered 13 straight years of losses.
Girsky said the European automotive market, which hit 20-year lows earlier this year, has bottomed out, but GM is not expecting a huge industry volume recovery in the next year or two.
GM has taken costs out of its struggling Opel unit in Europe and made the commitment to spend $5.2 billion on the business by the end of 2016 to launch new models. Now, GM needs to focus on making the brand stronger, and Girsky said Opel was on pace for the first time in 15 years to avoid losing market share in the region.
Girsky said talks with the union representing workers at the Bochum, Germany, plant slated to close at the end of 2014, were ongoing, but declined to say when they would wrap up or what the cost to GM would be. The Detroit company spent $527 million in 2010 to close a plant in Antwerp, Belgium, that employed 2,600 people. The Bochum plant has 3,300 employees.
Girsky, who advised the United Auto Workers union in talks with Chrysler CEO Sergio Marchionne during the company's 2009 bankruptcy, said he was a "fascinated bystander" watching the talks between the Chrysler boss and the UAW's retiree healthcare trust that owns a big stake in the U.S. carmaker.
Chrysler, 58.5 percent-owned by Italy's Fiat SpA <FIA.MI>, filed paperwork late on Monday in a step toward the flotation of shares held by the UAW, which owns the rest of Chrysler through the trust.
Marchionne is proceeding with the initial public offering demanded by the union, after the two sides failed to agree on a buyout deal in more than a year of talks.
The UAW wants more than $5 billion for its stake, higher than what Marchionne has offered. Chrysler's IPO filing included a warning by Fiat that the Italian carmaker may reconsider the benefits of deeper ties with Chrysler.
"I think they'll reach an acceptable compromise," Girsky said of the talks. "This is the kind of thing that doesn't really resolve itself until the end because both sides have every interest to sort of push the other to see how far they can go."
(Editing by Matthew Lewis)