GM to pay $423 million for PSA stake image

General Motors is willing to pay about $423 million in order to buy 7 percent of PSA Peugeot Citroen, as a government filing from the automaker shows.

The U.S. Securities and Exchange Commission filing also states that the alliance between the two carmakers will initially last 10 years. GM and Peugeot announced last week that they will share vehicle platforms, components and modules. They will also create a common purchasing company to buy goods and services from suppliers. Even though each company will continue to market and sell its own vehicles independently, they hope to save $2 billion a year over the next five years by sharing costs.

By March 2016, GM expects its alliance with Peugeot will have created four or more products, whether it’s vehicles, modules or powertrains. These products will be in production no later than September 2017. “We expect these are going to be small to midsize vehicles with lower margins that will benefit from greater economies of scale,” Aaron Bragman, a senior analyst at IHS Automotive was quoted as saying by The Detroit News.

GM will also establish a strategic commercial cooperation with Gefco, a PSA-owned logistics services company, to provide logistics services to GM in Europe and Russia.