Official: GM and PSA Peugeot Citroën Create Global Alliance image

General Motors (GM) and PSA Peugeot Citroën Wednesday announced the creation of a 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.

This is what the official press release says. But the move is aimed at cutting costs for both and boosting their competitiveness in Europe.

The companies said in a joint statement their plans to share vehicle platforms and pool the purchasing of components and services will save them $2 billion a year within five years, split roughly equally.

“This is an alliance, not a merger,” GM chairman Dan Akerson said in a conference call.

PSA managing board chairman Philip Varin assured that the French carmaker “remains independent, very clearly, on its strategic plan and its capital.”

GM is banking on the deal to help it reverse 12 years of losses in Europe, mainly on its Opel brand, totaling more than $12 billion. Peugeot, which relies heavily on the European market, hopes to increase sales in other markets.

Initially the carmakers will concentrate on developing small and medium size 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 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.”

It will give GM access to more small-car platforms and help the companies’ ability to negotiate lower prices from suppliers. It is expected to be operational by the second half of this year, GM said.

Peugeot’s Philippe Varin, chairman of the managing board at Europe’s second largest car maker, said:

“The overcapacity has to be dealt with independently by each partner. The alliance is not about dealing with capacity. The alliance does not replace what we have to do to sort out the capacity question.”

Peugeot’s automotive division lost 92 million euros ($123 million) in 2011. GM’s Europe operations have lost $15.6 billion since 1999.

Sales of new passenger cars in the 27 countries of the European Union fell 7.1% in January from a year earlier.