Mitsubishi deal won't solve all Peugeot's problems

PARIS (Reuters) - An expensive stalemate between PSA Peugeot Citroen (PEUP.PA) and Japan's Mitsubishi (7211.T) the risks of landing Europe's number two automaker with a partner too small to exploit the booming markets Asia.
Analysts look for answers on financing for any deal and believe it may be a poor imitation of Renault-Nissan alliance, 10 year, often as a rare example of a sector tie-up with success.
The French automaker, hit hard by the crisis in the industry and establish an ambitious to boost profitability in part by raising its presence in growing markets like China, confirmed Thursday it was in talks to strengthen their relationship with Mitsubishi.
Peugeot wants to escape from its European focus as sales in emerging markets and exploit economic uncertainty and declining opportunities scrapping incentives crimp in their region of origin.
The agreement is a step in the right direction, giving access Peugeot - albeit on a small scale - to key markets like China.
But analysts are not convinced that is the answer to all their problems and want details on the structure of supply, control of management, financing and more importantly, the price before sentencing.
"Matters of Peugeot are not easy to fix - not just a question of reducing program costs, here and there," said Credit Suisse analyst Stuart Pearson.
"There is no scale and it is too Eurocentric. That can be painful and expensive to fix," he added, warning that "the purchases of the Mitsubishi would be an expensive way to fix it."
In an industry burdened with overcapacity and crying out for consolidation, M & A moves are seen as good news in general.
But for Peugeot, the eighth largest automaker in the world by sales volume 2008, is a kind of underwhelming, "said Pearson, Mitsubishi describes as" a sub-scale struggling car company.
Mitsubishi sold 431,000 vehicles in the first half of the year, compared with 1.59 million for the Peugeot group, which includes Peugeot and Citroen.
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The alliance between the small French rival PSA Renault (RENA.PA) and Nissan Motor Co (7201.T) is strategically far more advanced.
Renault and Nissan are trying to strengthen their synergies and plan to lead the industry in the electric car segment unproven, in which Mitsubishi is one of the few players who have a car for sale