Closer Opel-Peugeot ties cloud BMW hybrid JV

MUNICH/PARIS Thu Jun 21, 2012 12:43pm EDT

A Peugeot 207 is seen on the assembly line at the PSA Peugeot Citroen plant in Poissy, near Paris, January 27, 2012. REUTERS/Benoit Tessier

A Peugeot 207 is seen on the assembly line at the PSA Peugeot Citroen plant in Poissy, near Paris, January 27, 2012.

Credit: Reuters/Benoit Tessier

MUNICH/PARIS (Reuters) - A joint venture to make hybrid car components between France's PSA Peugeot Citroen (PEUP.PA) and Germany's BMW (BMWG.DE) was thrown into doubt by the prospect of deepening ties between the French auto maker and its European rival Opel.

Opel Chief Executive Karl-Friedrich Stracke on Thursday said the alliance between Opel's parent company General Motors (GM.N) and Peugeot would now also include a cooperation between Opel and Gefco, Peugeot's car delivery group.

It is part of a broader alliance struck between GM and Peugeot in February, which the two companies hope will lead to at least $2 billion in annual savings from shared purchasing, logistics and the joint development and production of vehicles and parts.

Since agreeing the GM alliance, PSA has been adamant that numerous other technical cooperations would not be affected.

But Opel's latest move drew an icy response from Munich-based BMW, which said it wanted to ensure the joint venture company could continue making hybrid components, but stopped short of confirming Peugeot would remain on board in the long run.

"We are examining together how the (joint) company can continue fulfilling its duties," a spokesman for BMW said.

BMW said it has invested more in the joint venture so far than Peugeot, and would take into account its level of investment in any considerations about unwinding the alliance.

"We are discussing conditions for the exit of PSA but we will not make any payments," the BMW spokesman said.

A PSA spokesman was more blunt: "We are examining the impact of our alliance with GM on the joint venture...It's clear the alliance changes the conditions of our partnership."

French newspaper La Tribune reported on its website that BMW wanted to buy out some or all of PSA's stake in the joint venture, dubbed BPC Electrification, because it did not like Peugeot's recent GM alliance and was worried about the French carmaker's financial stability.

Both PSA and BMW said the situation would have no impact on a cooperation deal to develop engines for the mini.

In February, BMW and PSA expanded their long-standing engine partnership beyond joint development of small four-cylinder petrol engines to include hybrid electric components.

Peugeot cooperates with Toyota in small cars, with Mitsubishi in electric vehicles and sports utility vehicles (SUV), with Ford on diesel engines, and with Fiat in the area of light commercial vehicles.

FOUR ARCHITECTURES

Stracke told a gathering in Monte Carlo that Opel would cooperate with PSA on at least four major vehicle architectures. This will include large cars, small MPVs, small cars for emerging countries and low-emission small cars.

Investors have been focused on the turnaround at Opel, which GM opted to keep in 2009 after halting a planned sale.

Opel signaled it would once again focus on winning business in the mass market segment following an attempt to move the Opel brand upmarket to compete with peers like Volkswagen AG (VOWG_p.DE).

"We lost a bit of our customer base by moving up too quickly in the ranks and we lost some of our affordable customers with our pricing philosophy," Stracke said.

GM has lost money in Europe in the past 12 years, including $747 million last year, and has said the losses could continue for another two years.

(Reporting By Benjamin Mallet and Gilles Guillaume in Paris Irene Preisinger in Munich and Christiaan Hetzner in Monte Carlo; writing by Edward Taylor; Editing by David Cowell)

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Comments (1)
Sinbad1 wrote:
It will be sad to see Peugeot disappear, but any company that gets into bed with GM is ultimately destroyed.

Jun 22, 2012 3:36am EDT  --  Report as abuse
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