French carmaker PSA Peugeot Citroen (EPA:UG) said it plans to terminate its French joint venture Sevelnord with Italian partner Fiat SpA (BIT:F) and presented a project agreement to that effect to the venture’s works council.
According to the terms of the tentative deal, Peugeot will take over Fiat’s stake in the JV by 31 December 2012. Fiat and Peugeot hope to settle the terms of a definitive agreement for Sevelnord before the end of this year, the French group said.
The move follows the announcement made by the companies last May that they would not continue their cooperation beyond 2017.
The project agreement stipulates that Sevelnord would go on producing light commercial vehicles for both partners until Euro6 emission standards take effect at the end of 2016, Peugeot said, adding that all other cooperation arrangements with Fiat Group Automobiles (FGA) remain in place, including their Italian joint venture Sevel, located in Val di Sangro.
The Sevelnord venture assembles the Peugeot Expert, Citroen Jumpy and Fiat Scudo commercial vans. Its formation as Societe Europeenne de Vehicules Legers du Nord (Sevelnord) was agreed by the two partners in 1988 and the plant rolled out the first models Citroen Evasion, Fiat Ulysse, Lancia Zeta and Peugeot 806 in 1993, according to its website.
In May, its employees were asked to accept a number of concessions, including salary freeze and the reduction of hundreds of jobs among others, in order to avoid a closure of the plant, Reuters said. Unions expressed concerns that Peugeot could increase the number of jobs it would cut to 10,000 from 6,000 which it planned to reduce as part of a programme to achieve cost savings of €1bn ($1.2bn), the news agency said.
The carmaker announced last week a 13% decline in global light vehicles sales for the first half of 2012.