GM and PSA Peugeot Citroen mulling joint production of small cars in Brazil image

PSA Peugeot Citroen and General Motors are planning to build small cars in Brazil in a joint effort, according to a French union representative.

Bruno Lemerle, a member of the CGT union in France, said the allied automakers would pool production of two new models for Peugeot and Citroen and two for GM. The tentative plan has been confirmed by Brazilian unions. Lemerle also said no decision has yet been taken on a production site, which could be an existing Peugeot or GM plant, or even a new factory.

A Peugeot spokesman said the company had no comment on cooperation plans with GM. Under their alliance announced in February, GM and PSA Peugeot Citroen aim to save $2 billion a year within five years from purchasing, logistics and joint development of new vehicles and technologies.

GM took a 7 percent stake in Peugeot, making it the second-largest shareholder behind the Peugeot Family Group.

Lemerle revealed that plans to build a future generation of Peugeot and Citroen family cars using GM’s Opel Insignia platform are also advancing. This contradicts reports from German media earlier this month according to which GM had backed away from tentative plans to share its mid-sized car technology with Peugeot, weakening the rationale for their alliance.