Hot News: GM & PSA Peugeot-Citroen Share Platform Alliance


General Motors is buying 7 percent of PSA Peugeot Citroen stock to become its second-largest shareholder, and the two will develop a parts and components purchasing alliance that will save $2 billion per year combined within five years. They will share b-car (subcompact), d-car (midsize) platforms, SUV, and crossover platforms. PSA won’t jeopardize its diesel-engine joint-venture production with Ford, which currently produces turbodiesels for Jaguar and Land Rover as well as the French brands.

PSA will raise 1 billion euro (US$1 billion) capital through preferential subscription rights and an investment by Peugeot Family Group, the automaker’s largest shareholder.

“Just to be clear, this is an alliance, not a merger,” GM CEO Dan Akerson said in a phone conference with analysts and press Wednesday. It’s not connected to GM Europe’s reorganization efforts, which continues separately under the auspices of GM Vice Chairman Steve Girsky.

Akerson cited “huge economies of scale” between GM and PSA. It’s nothing like GM’s alliance with Fiat a decade ago, because it doesn’t include a “put” option that would require GM to buy any more than the initial 7 percent of the French automaker.

The alliance doesn’t affect production in any specific factory. Europe, like North America before the GM and Chrysler bankruptcies, has vast excess capacity and German labor costs are higher than French labor costs.

“Capacity has to be dealt with in the alliance by each partner,” PSA Chairman Phillippe Varin said, in the phone conference.

What does it mean for enthusiasts and consumers? GM and PSA say the first products from their alliance efforts will appear no earlier than the 2016 calendar year. Small GM cars using PSA platforms, and midsize Citroens and Peugeots on the next version of GM’s Epsilon II platform, and crossover Citroens and Peugeots on GM’s next-generation Theta platform would be a good guess.

Thanks to: Motor Trend

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