Rumor: GM, PSA to build joint facility in Brazil

Article by Christian Andrei, on May 25, 2012

Partners General Motors and PSA/Peugeot-Citroen are in talks regarding the construction of a joint facility in Brazil, the country's news magazine Veja reported without citing sources. The two companies will decide later in this month of whether to spend 1 billion euros in the project, the Brazilian media revealed.

The Brazilian facility could be constructed in either Rio de Janeiro or Minas Gerais, the magazine stated. However, a spokesperson for PSA dismissed this report, saying that this is "just a rumor." In February, the partner companies establish a joint venture to share automobile platforms and jointly purchase materials and parts.

They anticipate boosting the scope and the size of their product offerings, save billions on purchasing and revive their struggling operations in Europe as a result of their alliance. GM is anticipated to benefit from the assistance of PSA with hybrid technology and the development of smaller models. On the other hand, the French vehicle manufacturer is expected to capitalize on the expertise of GM in SUVs.

The companies will likely work together on diesel engines. They have experienced losses at their operations in Europe as demand drops in the midst of current economic problems in the region.

The automotive business of PSA lost 497 billion euros during the second half of 2011. As a result, PSA wants to slash 6,800 jobs and reduce costs by 1 billion euros in 2012. Troubles at Opel/Vauxhall caused the business of GM in Europe to dismiss plans to achieve break-even last year. GM Europe, which includes Chevrolet and Opel/Vauxhall, ended 2011 with a $747 million operating loss.

Topics: psa, gm, brazil

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