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PSA seeks engine supply customers as BMW, Ford end partnerships

PSA/Peugeot-Citroen is talking to potential customers for an anticipated surplus of engines as BMW and Ford stop using engines jointly developed with the French carmaker.

PSA is contact with at least three possible clients for 1.6-liter gasoline engines manufactured for BMW and larger diesels built for Ford in Tremery, eastern France, powertrain chief Christian Chapelle said.

BMW and Ford both ended engine deals with PSA after it entered a short-lived alliance with General Motors in 2012. PSA and Ford still share some smaller diesels.

BMW is steadily introducing its own small gasoline engines to Mini and BMW 1-series models, replacing those developed with PSA and produced in Douvrin, northern France, while Ford is dropping Peugeot diesels of two-liter and above.

“PSA still has the right to sell these engines and there are plenty of people who are interested,” Chapelle said in an interview at the Paris auto show on Thursday, declining to elaborate.

Under new CEO Carlos Tavares, PSA is recovering from a European car sales slump that saw it lose more than €7.3 billion ($9.3 billion) over two years and receive successive French government-backed bailouts.

The end of its deal with BMW and reduced cooperation with Ford have raised questions over PSA’s ability to fund solo development of new engines to replace its current lineup in compliance with ever-tightening emissions standards.

Renewed development and manufacturing of future diesels with Ford have not been ruled out, Chapelle also said on Thursday.

GM in December sold the 7 percent PSA stake it had purchased the previous year, as the two carmakers effectively ended an alliance plan and scaled down cooperation.