General Motors and PSA are scaling back their alliance

Article by Anita Panait, on October 31, 2013

General Motors and PSA/Peugeot Citroen are scaling back an alliance announced in 2012. PSA is seeing the possibility of selling a stake to Dongfeng Motors in exchange for an investment while GM is seeking to have greater control of its future in Europe. According to PSA, a planned joint platform for subcompact cars that was the focus the alliance could be cancelled, as “further analysis showed that the business model just wasn't there.”

PSA said in a statement on its quarterly results that planned mid-term synergies of $1 billion for the French carmaker from the alliance may be revised downward. Barclays analyst Kristina Church told Reuters that the plan to replace the Peugeot 208, Citroen C3 and Opel Corsa subcompacts with a common small car was "absolutely key" to the alliance.

She noted that GM appears to have no focus on the alliance with PSA anymore since the US carmaker doesn‘t want to “be partnered with a struggling company.” She added that GM also has alternative methods to turn things around. PSA spokesman Jean-Baptiste Thomas has remarked that the alliance with GM is going on as scheduled, but said that there are projects under review.

He added that some projects are not economically feasible, so they were dropped. He noted that the alliance is assessing the economic feasibility first of the projects one-by-one. PSA earlier disclosed this month plans to shift output of a compact minivan to a GM site in Spain. GM's Opel unit will produce at its Zaragoza site in Spain a new generation of a jointly developed small minivan that may replace the Opel Meriva and Citroen C4 Picasso starting late 2016.

Topics: gm, psa, partnership

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