GM-Peugeot alliance

GM-Peugeot alliance

US automotive manufacturer General Motors and the French automotive company PSA Peugeot Citroen announced a global deal yesterday which will bring collaboration on product development.

The terms of the deal give GM a 7% stake in Peugeot, giving it the second largest stake in the French car manufacturer after the Peugeot family itself.

The first collaborative car design from the new alliance is expected by 2016.

The aim of pooling resources for development is to save on R&D expenditure. An estimated $2bn a year is expected to be saved.

Dan Akerson, GM’s chairman and chief executive commented on the “tremendous opportunity the new alliance would bring to the two companies to achieve “long-term sustainable profitability in Europe.”

Both companies have been struggling in Europe with GM’s European brand, Opel, losing $747m (£472m) in 2011 and Peugeot’s profits down 48% on 2010.

The alliance between GM and Peugeot reflects comments made by Sergio Marchionne, CEO of Chrysler Group and Fiat, at the CBI Annual Conference in November 2011.

At this London-based event Mr Marchionne suggested that the global automotive industry is due a period of rationalisation and consolidation to account for what he called “chronic overcapacity” which, in Europe, “has now reached suffocation point.”

“Many other industry sectors have already been through a major consolidation and rationalisation” he commented, “such as the steel industry in the 1990s.”

Mr Marchionne looked to a new era for global auto manufacturing in which market consolidation for better focus in new markets would be characterised by global auto alliances.

“First [to address] is the imperative, imposed by this new phase in the evolution of the global economy, to boost cross-border revenue opportunities and to seek them even further afield. New markets are the new end game,” he said.

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