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An Alliance Is Formed: GM Buys 7% Stake Into PSA Peugeot CitroŽn


William Maley
Editor/Reporter - CheersandGears.com
February 29, 2012

The rumor of GM and PSA Peugeot Citroën creating an alliance for the past couple of weeks is now true. Today, the two announced a new global alliance in which GM will buy a 7% stake in PSA.

The alliance would have GM and PSA sharing vehicle platforms, components and modules. Plus, the alliance would give both stronger purchasing power for sourcing components, raw materials and other goods and services. The vehicle platforms in question are will be small and midsize passenger cars, MPVs and crossovers, with the first one arriving by 2016.

GM says that results from the alliance will save approximately $2 billion annually within about five years.

Still, analysts and investors are still wondering why GM & PSA are teaming up.

Press Release is on Page 2





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12 Comments

This still comes across as a big win for PSA Peugeot Citroen. I see very little upside for GM.
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I think this GM Europe will be the ones mostly affected by this. The only way this affects us here on this side of the pond is that the next iteration of Malibu/Cruze/Sonic et. al could be riding on something that Peugeot/Citroen had a hand in designing. I don't see either making a Fiat-esque return to the US.

Ultimately this sends a strong message to GME - we've found your potential replacement, so shape up or else....
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Chrysler has Fiat, Nissan has Renault. PSA + GM is not bad if GM wants to expand into that portion of Europe. Perhaps at some point, Opel becomes a sub brand of PSA and that is the way to shed Opel......
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After researching, I think I am giving a cautious yes to this idea for the following reasons:
  • Financially I think investing in PSA means GM leveraging PSA than other ways around like how Dr. Z leveraged Chrysler.
  • Logistically platform and engine sharing means better control over suppliers.
  • Market wise, give heartburn to VW close to its own battle grounds, who thinks it is indestructible and also keep Toyota under check.
  • Politically put some fire beneath German government and unions which have been real hard to negotiate.
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I have to agree on the leverage on the Germans. This could be a good bargining chip.

As for sharing platforms . Peugeot will get help with better and new platforms and GM will leverage it out over a greater number of models. This should help lower the cost per unit they build and increase profits.

Better product for Peugeot and lower unit cost for GM. I see no down side with only 7% investment. I am sure GM has this also set that they can pull out easily.

Right now GM is all about incresed profits and this will help in Europe where profits were very hard to come by. With the loss of Saab and the Fiat/Alfa shared platforms GM was not sharing as much as they used to in Europe.
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Z and Hyper you make excellent points, I am warming up to this Alliance.
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I have to agree on the leverage on the Germans. This could be a good bargining chip.

As for sharing platforms . Peugeot will get help with better and new platforms and GM will leverage it out over a greater number of models. This should help lower the cost per unit they build and increase profits.

Better product for Peugeot and lower unit cost for GM. I see no down side with only 7% investment. I am sure GM has this also set that they can pull out easily.

Right now GM is all about incresed profits and this will help in Europe where profits were very hard to come by. With the loss of Saab and the Fiat/Alfa shared platforms GM was not sharing as much as they used to in Europe.


+1
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Z made the best points I just agreed for the most part. The Leverage part with the Germans is one I never considered till he pointed it out. I will give him a plus one for that one!
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They could platform share the Peugeot RCZ right into Chevy dealerships and I wouldn't complain. The Citroen C1 and Peugeot 107 would share with the Spark. The Peugoet 206+ and Citroen C3 - C3 Picasso could ride with the Chevy Sonic. Peugeot 308 and Citroen C4 line are a dead ringer for the Cruze platform. The Peugeot 508 and Citroen C5 and C6 go on Epsilon II. Peugeot 407, which is in major need of a makeover could go on Alpha.
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Actually there is more synergy like you pointed out than originally perceived because both companies are so vastly different yet play in the same sand box in some key segments. The alliance can really cause a major heartburn to Germans, Japanese and Korean manufacturers and I like the secondary competitiveness it creates for market share.

Drew and I were talking at Detroit show about consolidation of auto manufacturers in EU and China in next 5 years. Honestly we were expecting EU companies to duke it out not GM coming in. This is the first major move in the middlegame.

I also like how there are no commitment terms unlike the Fiat fiasco last decade. The Italians docked GM for $2B+ in cash, which honestly saved Fiat from bankruptcy. Obama and Chrysler should thank GM indirectly.

Frankly the news came so fast that people are still grasping on to the impact that's why no "editorials" or "expert opnions" are flying off at-random. I give credit to Ackerson's team here.
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I thnk this is a good example where the money guys are not all bad. Like it or not there is a need for good finance people in a company the problem is not all of them are that good. I think GM right now has a good mix and they are working together well.
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I think we will see a Peugeot version of the next gen Chevy Volt.
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