GM, PSA merger could save their European operations

Article by Anita Panait, on October 16, 2012

General Motors and PSA/Peugeot-Citroen are holding discussions over a possible combination of their operations in Europe as part of the second phase of the partnership deal they signed earlier in the year, sources told Reuters and the French newspaper La Tribune. According to the sources, one of the possible options is to merge GM\'s Opel/Vauxhall unit with PSA\'s automotive operations into a joint venture.

A source told Automotive News Europe that GM could take a 30 percent stake in the joint venture and invest up to $10 billion in the new European firm.  The source said that by taking a 30 percent stake, GM would not have to consolidate Opel\'s financial results, and this would limit the US carmaker’s financial liability.

In February 2012, GM and PSA inked a partnership agreement for joint purchasing of parts and for sharing vehicle platforms aimed at developing several future vehicles. The source told Automotive News that talks on more profound linkup commenced within weeks of the alliance\'s being signed. The source disclosed that GM and PSA have explored different settings for merging operations to eliminate costs including sale of Opel to PSA and a sale of PSA\'s automotive division to GM.

GM Chief Financial Officer Dan Ammann and other executives have been sharing financial data with their PSA counterparts. According to the source, these data include detailed information on labor costs for factory workers and engineers.

The source said this would be a way to combine two companies and get rid of excess resources. Both GM and PSA have excess capacity in Europe. A GM spokesman remarked that they are focused on reaping the fruits of its alliance with PSA that they have identified.

Topics: gm, psa

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