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Now it's Mercedes and Peugeot...

THERE is considerable speculation in the automotive world that DaimlerChrysler - the parent company of Mercedes-Benz - may be on the verge of a bid for the French car maker PSA Peugeot Citroen after stories that Peugeot will produce a new Smart car for Mercedes. The Stuttgarter Zeitung newspaper - which is very well-connected within the Mercedes management - reported that the Peugeot group will produce a platform for a four-seat, front-wheel-drive version of the Smart. This could be built on the same platform as the Peugeot 206. The deal would save DaimlerChrysler millions of dollars in development costs and could see the cars appearing by 2003.

Industry analysts suggest that a deal might be the first step in a DaimlerChrysler takeover of Peugeot as the French company's products will fill a gap in the DaimlerChrysler range of cars. Peugeot has traditionally done well in the small car market with models such as the 205 and 206 becoming huge sellers. Peugeot has consistently said that it is not interested in merging with another car company but it is quite possible that if talks are not successful there could be a hostile takeover bid. The resulting group would be the third largest car company behind General Motors and Ford but ahead of Toyota and Volkswagen.

Nothing is likely to happen for a few months yet but if there is a takeover there could be some very interesting side-effects in F1. Peugeot is looking more and more likely to concentrate on the World Rally Championship in 2001 when the current contract with Prost Grand Prix expires. A takeover of Peugeot by DaimlerChrysler might justify the continuation of Peugeot involvement in F1 - perhaps with a rebadged Mercedes V10 engine. This would have the added effect of giving McLaren-Mercedes an F1 junior team through which to channel its newcomers.