General Motors and PSA/Peugeot-Citroen on Wednesday said they are forming a global alliance that will let the two carmakers share platforms, create a purchasing joint venture and potentially save billions of dollars in annual operating costs.
As part of the agreement, GM will take a 7 pc stake in PSA, which will raise an additional 1 billion euros through a capital increase. The Peugeot family, which currently controls more than 30 pc of PSA, will remain the carmaker's largest shareholder. GM will be the second-biggest owner.
Though there was no indication Wednesday that the planned alliance would, in the long term, go beyond GM's small shareholding in PSA, the tie-up marks the arrival on the automotive scene of yet another global powerhouse. GM and PSA join the Volkswagen Group, with its many brands; the Renault-Nissan alliance; Toyota; and the Fiat-Chrysler carmaking venture as global mega-players in the volume car market.
GM and PSA said in a press release that they will continue to market and sell their vehicles independently, but would share platforms, components and modules. The planned global purchasing joint venture will buy commodities, components and other goods and services with a combined volume of about 125 billion dlrs.
The companies said that, as a result of the tie-up, they expected to save a combined 2 billion dlrs annually within five years. Those savings are expected to be shared equally between the carmakers. Few of the savings will be realized in the first two years, they said.
The carmakers' CEOs highlighted the potential of the alliance.
GM CEO Dan Akerson in particular mentioned the group's troubled European operations. Though GM posted a group profit last year, its German Opel subsidiary was the main loss-making unit of the group.
"The alliance synergies, in addition to our independent plans, position GM for long-term sustainable profitability in Europe,” Akerson said.
PSA CEO Philippe Varin said the alliance "is rich in its development potential." And he added: "the whole group is mobilized to reap the full benefit of this agreement.”
GM and PSA plan to derive scale benefits from joint European programs and said they will focus on small and midsize passenger cars, MPVs and crossovers. The first vehicle on a common platform is expected to launch by 2016, they said.
PSA, which is heavily dependent on the weak European car market, saw its net profit slide 48 pc in 2011 to 588 million euros. Its core automotive business posted a loss for the year.
-By Arjen Bongard