The alliance between PSA/Peugeot-Citroen and General Motors Co. may be diminished, a move that may lead to an intensified relationship with Chinese carmaker Dongfeng Motor Corp. PSA said that plans for a joint platform with GM for subcompact cars are "under review," adding that planned mid-term synergies of $1 billion for PSA from the GM alliance may be revised downward.
PSA logged a 3.7-percent drop in revenues in the third quarter of 2013 to EUR12.11 billion ($16.68 billion) from EUR12.58 billion in the same period in 2012. PSA continues to lose market share in Europe this year to Volkswagen and other carmakers.
Its core auto unit suffered a 5.8-percent decline in revenue to EUR8 billion, reflecting "growing pressure on market shares from premium and low-cost brands" and the negative currency effect attributable to the Russian ruble, Brazilian real, Argentine peso and British pound.
The French carmaker has reiterated its target to reduce cash consumption by at least 50 percent in 2013, after consuming around EUR3 billion ($4.1 billion) in 2012. According to PSA spokesman Jean-Baptiste Thomas, its alliance with GM is proceeding as scheduled, but noted that the partners have other projects under review. He said that some projects have been dropped because they are not economically feasible, adding that they are taking the projects one-by-one and assessing their economic feasibility first.
PSA recently disclosed plans to shift production of a compact minivan to GM’s Zaragosa site in Spain. The US carmaker’s Opel unit will produce a jointly developed small minivan that may replace the Opel Meriva and Citroen C4 Picasso at the site starting in late 2016. GM spokesman Ulrich Weber remarked that the alliance is “moving forward with the implementation" of projects that have already been agreed upon.
In July this year, GM Vice Chairman Steve Girsky told Bloomberg that the US carmaker has no plans to make further investments in PSA/Peugeot-Citroen. He called the speculation on intensifying the alliance between the carmakers a distraction. According to Girsky, he wants to get the current programs to work.
GM already made an investment of EUR320 million ($418 million) in 2012 to acquire a 7-percent stake in PSA as part of an alliance that entails joint purchasing and vehicle development. Girsky is responsible for overseeing GM’s bid to cut its losses in Europe by mid-decade as well as to rebuild the Opel brand.
Girsky was responsible to realizing the deal with PSA and was interim chief of GM’s operations in Europe until he hired former Volkswagen AG executive Karl-Thomas Neumann to lead Opel. Girsky referred to comments made by GM chief executive Dan Akerson in June. Akerson back then said GM has no plans to invest more money into PSA “at this time,” adding if they see something change, they would “re-evaluate that.”