Jump to content
Create New...
  • William Maley
    William Maley

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


    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


    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.

    User Feedback

    Recommended Comments

    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....

    Link to comment
    Share on other sites

    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......

    Link to comment
    Share on other sites

    After researching, I think I am giving a cautious yes to this idea for the following reasons:

    1. Financially I think investing in PSA means GM leveraging PSA than other ways around like how Dr. Z leveraged Chrysler.
    2. Logistically platform and engine sharing means better control over suppliers.
    3. Market wise, give heartburn to VW close to its own battle grounds, who thinks it is indestructible and also keep Toyota under check.
    4. Politically put some fire beneath German government and unions which have been real hard to negotiate.

    • Agree 4
    Link to comment
    Share on other sites

    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.

    • Agree 1
    Link to comment
    Share on other sites

    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

    Link to comment
    Share on other sites

    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!

    Link to comment
    Share on other sites

    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.

    Link to comment
    Share on other sites

    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.

    Link to comment
    Share on other sites

    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.

    Link to comment
    Share on other sites



    Join the conversation

    You can post now and register later. If you have an account, sign in now to post with your account.
    Note: Your post will require moderator approval before it will be visible.

    Guest
    Add a comment...

    ×   Pasted as rich text.   Paste as plain text instead

      Only 75 emoji are allowed.

    ×   Your link has been automatically embedded.   Display as a link instead

    ×   Your previous content has been restored.   Clear editor

    ×   You cannot paste images directly. Upload or insert images from URL.


  • google-news-icon.png



  • google-news-icon.png

  • Subscribe to Cheers & Gears

    Cheers and Gears Logo

    Since 2001 we've brought you real content and honest opinions, not AI-generated stuff with no feeling or opinions influenced by the manufacturers.

    Please consider subscribing. Subscriptions can be as little as $1.75 a month, and a paid subscription drops most ads.*
     

    You can view subscription options here.

    *a very limited number of ads contain special coupon deals for our members and will show

  • Community Hive Community Hive

    Community Hive allows you to follow your favorite communities all in one place.

    Follow on Community Hive
  • Posts

    • I’m 99% sure it’s coming, just not officially announced. It might be a 2026 model. They’ve already developed the powertrain for the China market and with Barra’s reversal on PHEVs in the US, it seems logical to not waste development dollars.
    • I've warmed up to this more and more.  Even if the front end / grille is a little extreme and non Trad Buick, it actually comes off like some other brands.  Side profile as well.  I think Buick's distinction with these new front ends is to become sort of anonymously familiar with other brands like Toyota  and Subaru, but different enough so it looks unique vs other GM stuff. I am ok with the side profile now too, mostly.  It's generic but not badly done.  About as good as you can expect. The interior looks nice in pictures but I wonder if the dash materials will be cheap looking.  I like the idea of a big screen but it is a bit blob-like in its shape.  But that is the distinguishing feature of Buick interiors now.  I like the Traverse and Acadia interiors also, but the Enclave's is unique enough to appeal to someone who doesn't want the usual Chevy or GMC look.
    • That is the 'shark fin' you finally recognize........ I think if the Equinox EV is priced well (considering incentives and subsidized leases) I think it has a real chance to move in some volume.  Its shape is a little more un-GM (looks a bit like the Kia EV6) and may resonate with the lower end EV buyer more.  It appears to have a lot of room inside, and a really good dash layout. Let's see if GM scales back production numbers WAYYY back or if they decide to subsidize the living daylights out of their EV lines and just produce a lot of them.  They should do the latter, the rate of EV adoption is going to be slow for awhile again but you can win people with incentives.  We are likely to see all of these new GM EV's pretty much untouched for the next ten years (except for batteries and motors).  They can't kill any of these models because they would receive backlash after the EV1 axing.  They'll just have to plan for like a 10 year production run of all of the models.  Which is fine. They can get some desperate leases on the BlazerEV or Equinox EV set up for like 249 and not much down and I'd get one as a third car / weekly commute / good weather car and just use it to keep miles off my other cars.  Ultimately I'd like a hybrid....gonna look at the 25 Camry when it comes out as a commuter, AWD plus hybrid and 45 mpg I'd be up for that.  The 25 Equinox should have been offered with a plug in hybrid or even a plain hybrid.
    • The new Traverses make me double take as I think they are a Tahoe at first but then something in the back of my brain will click and say "WRONG". The difference between Equinox EV and Blazer EV is range, performance, and sportiness. 
    • I had seen first of the new traverses about 4 weeks ago but forgot to load pictures here . Lot trolling just now. The equinox EV is here now , not sure why we have the Blazer EV then since they are about the same interior size. Silverado EV in work truck trim sure looks meh.    the new traverses here I’ve seen have been front drive only, explains why they haven’t sold yet. Anyone here is snow country will look to get AWD.     
  • Who's Online (See full list)

    • There are no registered users currently online
  • My Clubs

×
×
  • Create New...

Hey there, we noticed you're using an ad-blocker. We're a small site that is supported by ads or subscriptions. We rely on these to pay for server costs and vehicle reviews.  Please consider whitelisting us in your ad-blocker, or if you really like what you see, you can pick up one of our subscriptions for just $1.75 a month or $15 a year. It may not seem like a lot, but it goes a long way to help support real, honest content, that isn't generated by an AI bot.

See you out there.

Drew
Editor-in-Chief

Write what you are looking for and press enter or click the search icon to begin your search