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GM officially ties up with PSA Peugeot Citroen - first joint model coming by 2016

 GM officially ties up with PSA Peugeot Citroen - first joint model coming by 2016
GM CEO Dan Akerson and PSA Peugeot Citroën Chairman of the Managing Board Philippe Varin sign global alliance 29.2.2012

Big changes in store for Europe

General Motors and PSA Peugeot-Citroën have officially announced plans to create a global automotive alliance.

Designed to leverage the combined strengths of both companies, the alliance will focus on two key aspects: shared platforms and a global purchasing joint venture for sourcing commodities and other goods from suppliers.

More specifically, GM and PSA Peugeot-Citroën will share selected platforms, modules and components on a worldwide basis in order to achieve "cost savings, gain efficiencies, leverage volumes and advanced technologies and reduce emissions." Their efforts will primarily focus on small and midsize passenger cars, MPVs and crossovers. If everything go according to plan, the first model on a shared platform will be launched by 2016.

As part the agreement, PSA Peugeot-Citroën is expected to raise approximately €1 ($1.3) billion through a capital increase with preferential subscription rights for shareholders. GM, on the other hand, will acquire a seven percent stake in PSA Peugeot-Citroën.

In a statement, GM CEO Dan Akerson said "This partnership brings tremendous opportunity for our two companies. The alliance synergies, in addition to our independent plans, position GM for long-term sustainable profitability in Europe."

His sentiments were echoed by PSA Peugeot-Citroën's Chairman of the Managing Board Philippe Varin who commented "This alliance is a tremendously exciting moment for both groups and this partnership is rich in its development potential. With the strong support of our historical shareholder and the arrival of a new and prestigious shareholder, the whole group is mobilized to reap the full benefit of this agreement."

GM and PSA Peugeot Citroën Create Global Alliance

Long-term strategic pairing to leverage combined scale and strengths

NEW YORK - General Motors and PSA Peugeot Citroën today announced the creation of a long-term and broad-scale global strategic alliance that will leverage the combined strengths and capabilities of the two companies, contribute to the profitability of both partners and strongly improve their competitiveness in Europe.

The alliance is structured around two main pillars: the sharing of vehicle platforms, components and modules; and the creation of a global purchasing joint venture for the sourcing of commodities, components and other goods and services from suppliers with combined annual purchasing volumes of approximately $125 billion. Each company will continue to market and sell its vehicles independently and on a competitive basis.

Beyond these pillars, the alliance creates a flexible foundation that allows the companies to pursue other areas of cooperation.

In connection with the alliance, PSA Peugeot Citroën is expected to raise approximately €1 billion through a capital increase with preferential subscription rights for shareholders of PSA Peugeot Citroën, underwritten by a syndicate of banks and including an investment from the Peugeot Family Group, as a sign of its confidence in the success of the alliance. As part of the agreement, which includes no specific provision regarding the governance of PSA Peugeot Citroën, GM plans to acquire a 7 percent equity stake in PSA Peugeot Citroën, making it the second-largest shareholder behind the Peugeot Family Group.

"This partnership brings tremendous opportunity for our two companies," said Dan Akerson, GM chairman and CEO. "The alliance synergies, in addition to our independent plans, position GM for long-term sustainable profitability in Europe."

Philippe Varin, chairman of the managing board of PSA Peugeot Citroën, declared, "This alliance is a tremendously exciting moment for both groups and this partnership is rich in its development potential. With the strong support of our historical shareholder and the arrival of a new and prestigious shareholder, the whole group is mobilized to reap the full benefit of this agreement."

Under the terms of the agreement, GM and PSA Peugeot Citroën will share selected platforms, modules and components on a worldwide basis in order to achieve cost savings, gain efficiencies, leverage volumes and advanced technologies and reduce emissions. Sharing of platforms not only enables global applications, it also permits both companies to execute Europe-specific programs with scale and in a cost-effective manner.

Initially, GM and PSA Peugeot Citroën intend to focus on small and midsize passenger cars, MPVs and crossovers. The companies will also consider developing a new common platform for low emission vehicles. The first vehicle on a common platform is expected to launch by 2016.

This alliance enhances but does not replace either company's ongoing independent efforts to return their European operations to sustainable profitability.

The purchasing cooperation defined in the agreement allows the companies to act as one global purchasing organization when it comes to sourcing commodities, components and services from suppliers, taking full advantage of the joint expertise, volume, platforms and standardized parts. Combining GM's robust global processes and organizational structure with best practices from PSA Peugeot Citroën will bring significant value and efficiencies to the purchasing operations at both companies.

Additionally, the alliance is exploring areas for further cooperation, such as integrated logistics and transportation. To this end, GM intends to establish a strategic, commercial cooperation with Gefco, an integrated logistics services company and subsidiary of PSA Peugeot Citroën, whereby Gefco would provide logistics services to GM in Europe and Russia.

The total synergies expected from the alliance are estimated at approximately $2 billion USD annually within about five years. The synergies will largely coincide with new vehicle programs, with limited benefit expected in the first two years. It is expected the synergies will be shared about evenly between the two companies.

The alliance will be supervised by a global steering committee that includes an equal number of senior leader representatives from each company..

Its implementation is subject to requisite regulatory approvals in certain jurisdictions as well as notification to the appropriate workers councils.

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Comments (7)

PAA
I only hope Opel quality doesn't suffer from the French.
Mar 1, 2012 12:39 am
1 0
coupecars
Honestly, I wouldn't worry about that. On the contrary. I've been driving Peugeot cars for almost 20 years and yes there have been issues, mostly electrics. But they have very much improved during the last 5 years. 308, RCZ, Citroën C5, all very reliable cars. Cheers
Mar 1, 2012 1:01 pm
0 0
PAA
Good to hear. Cause I have a couple of friends that have the previous Megane and they're suffering from regular faults. Maybe the French are paying more attention to their quality.
Mar 2, 2012 1:15 am
0 0
autoficianado
This is about making GM Europe (Opel & Vauxhall) and PSA Peugeot-Citroen profitable. GM Europe lost 2/3 of a billion last year. PSA lost practically twice that much. This is not a takeover but an alliance. The economic problems & over capacity of the Euroautomakers are driving this and it's most likely alliance now or be bought by VW and lose their autonomy. Fiat-Chrysler is a better fit as a company but GM products are much improved and this will help to keep them on an upward spiral.
Feb 29, 2012 7:43 pm
0 0
marshall-mills@sbcglobal.net
Dammit, GM...seven brands. Chevrolet. Buick. Cadillac GMC. Opel. Vauxhall. Holden. WHY do you need to tie up with Peugeot-Citroen? WHY? You have ENOUGH brands in your stable already, for Christ's sake. You do NOT need more. This is exactly the kind of self-inflicted idiocy that nearly landed you bankrupt three years ago. Stop trying to absorb every single company in the world and focus on what really matters: YOUR OWN. Man...I'm really starting to feel for the workers in Germany (Opel).
Feb 29, 2012 6:42 pm
0 2
dcars62
Interesting move, now there is no reason to keep Opel going.
Feb 29, 2012 3:24 pm
0 2
progressive
Ok GM, now sell Opel to German government :)
Feb 29, 2012 1:48 pm
0 2
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