gefco.automotiveIT

The planned sale of Gefco is just one of the measures PSA is undertaking to restore the company to profit (Photo: Gefco)

PSA/Peugeot-Citroen is negotiating to sell the majority of its Gefco logistics division to JSC Russian Railways in a move that will boost the embattled French automotive group's finances and allow it to concentrate on its core carmaking business.

PSA said in a press release that it aims to sell 75 pc of Gefco to JSC for 800 million euros. In early 2012 Gefco signed an exclusive long-term logistics contract with PSA. It concluded a similar pact with General Motors Europe in July.

The divestment move, which is still subject to regulatory approval, is part of a series of measures PSA is undertaking to reverse the losses it is making as a result of a sharp decline in its core western European market.

The carmaker plans to close one of its French plants and CEO Philippe Varin said in July the company will undertake a broad reduction of structural costs.

PSA swung to a first-half net loss of 819 million euros from a profit of 806 million euros a year earlier as revenues dropped 5.1 pc to 29.55 billion euros.

The sale to JSC will will provide opportunities for Gefco to broaden its geographical reach to China, India and Latin America. It will also accelerate its growth in eastern and central Europe and in Russia in particular, PSA said.

If the sale goes through, PSA said Gefco would continue to be run by its current president, Luc Nadal and its head office would stay in France.

State-owned Russian Railways is one of the largest transportation companies in the world, operating an 85,000 km rail network and providing a range of transportation services.