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EU formally questions French government assistance of Peugeot's finance arm

Recently, the finance arm of PSA/Peugeot-Citroën was in such debt trouble that it was pricing itself out of the car loan market. The rates it was paying to service its debt, which was rated one step above junk, were so high that it was forced to charge car-buying customers higher rates than they could find elsewhere. This was adding to Peugeot's already impressive woes by sending revenue out the door to competitors.
Two months ago a deal was worked out with the French government whereby the state would provide 7 billion euro ($9 billion USD) in bonds to guarantee the finance arm's loans. The French government could nominate someone to join the Peugeot board, Peugeot would guarantee more French jobs, and on top of that deal, other banks would provide non-guaranteed loans. The government would take no equity stake in the car company.
Although not yet finalized, the arrangement is meant to create some breathing room for Peugeot Finance to lower its interest rates for customers, and a government-nominated board member, Louis Gallois, was recently named to Peugeot's supervisory board. The arrangement was also openly questioned by at least three competitors: Ford, Renault - which is 15-percent owned by the French government after it received state aid - and the German state of Lower Saxony, itself a 15-percent shareholder in Volkswagen.

Winterkorn remains CEO of Volkswagen's majority shareholder

Martin Winterkorn may have stepped down as the chief executive of Volkswagen in the wake of the diesel emissions scandal, but he's not out from under the company's large umbrella just yet. In fact, according to a report from Reuters, he still holds four top-level positions not only within the industrial giant's bureaucracy, but at the top of it. And one of those is as CEO of the company's largest shareholder. That holding company is Porsche SE, the investment arm of the Piech and Porsche families (Ferdinand Porsche's descendants) which holds over 50 percent of VW's shares. In 2008, Porsche SE acquired majority interest in the Volkswagen Group which in turn acquired Porsche the automaker – and placed VW's Winterkorn at the head of the executive board of the holding company. Though Winterkorn has resigned from his position as chairman of VW's management board, he has apparently yet to step down from running Porsche SE. That's not the only job that Winterkorn still retains in VW's senior management. He also continues to serve as chairman of Audi, as well as truck manufacturer Scania, and the new Truck & Bus GmbH into which Scania has been grouped together with Man. It remains unclear if or when Winterkorn might resign from those positions as well, or how his tenure in those posts might affect the company's effort to start over in the aftermath of the scandal in which it is currently embroiled. Also unclear, Reuters reports, is how much, exactly, Winterkorn will receive in compensation after having stepped down from his chair at the head of the VW executive board. His pension is reported at over $30 million, but he could be awarded a large severance package as well amounting to as much as two years' worth of his annual compensation, which amounted to around $18 million last year. Whether he receives the severance pay or not is expected to depend on whether his resignation is considered by the supervisory board to have been the result of his own missteps or independent of the situation that resulted in his resignation. One way or another, he's not likely to go poor anytime soon.

Audi diverting a third of R&D budget to electrification

Companies make promises all the time. We'll do X by Y. The new A will be our biggest seller in B. You know the drill. But it's when an automaker puts its money where its mouth is that we really stand up and take notice. That's precisely what Audi is doing as it attempts to convert 25 percent of its sales to electrified vehicles by 2025. Citing two sources with knowledge of Audi's plans, Reuters reports that around a third of the company's research-and-development budget will go to " electric cars, digital services, and autonomous driving." Of course, shifting that much money over to newer technologies means sacrifices elsewhere – Reuters' sources claim Audi will move money away from combustion engines and reduce country-specific powertrain variants, but the sources wouldn't get more specific. According to Reuters, Audi is 22nd in total sales of hybrids and EVs. That's eight spots behind Mercedes and ten spots behind BMW (not to mention hybrid-happy Lexus). Audi's only electric representatives in the US market are the A3 e-Tron and Q5 Hybrid and things aren't much better in Europe – the company needs to dump buckets of money into expanding its meager lineup to bring up the percentage of EVs it sells. Expect greater detail on Audi's electrification plans very soon – CEO Rupert Stadler will discuss the company's path forward on Wednesday at a closed-door meeting in Munich with over 2,000 managers. It's unlikely all those managers will be able to keep quiet. We'll be listening. Related Video: Featured Gallery Audi E-Tron Quattro Concept View 36 Photos News Source: ReutersImage Credit: Audi Green Audi Volkswagen Green Driving Electric Hybrid PHEV e-tron audi e-tron electrification