By Edward Taylor
FRANKFURT Dec 12 General Motors Co
scaled back its alliance with Peugeot on Thursday and
put a brave face on yet another setback for its efforts to seek
growth in Europe through collaboration and partnerships.
It was the second time in a year GM had trimmed its
expectations on the deal it agreed in February 2012, but it said
the alliance could still offer up new opportunities.
In a joint press release, the carmakers cancelled a joint
vehicle project and said annual savings from sharing development
costs on a raft of projects will now come to only $1.2 billion,
rather than $2 billion.
"The partners are now focused on execution of the alliance
while remaining open to new opportunities," GM's executive vice
president and Opel Chief Executive Karl-Thomas Neumann said.
In the early days of the alliance, Peugeot and GM unveiled
plans for at least five vehicle and powertrain programmes.
But on Thursday PSA Peugeot Citroen and General Motors said
they would stop joint development of a common vehicle platform
and small petrol engine, once again reducing the scope of what
was intended to be a broad-based alliance.
Work to develop a light commercial vehicle, a multi-purpose
people carrier and a crossover SUV would continue, they said.
"Joint ventures always start with overly ambitious targets,"
ISI analyst Arndt Ellinghorst said, adding that he currently
estimated joint savings for Peugeot and GM to amount to zero.
"Partnerships can work, but it always takes much longer for
the benefits to materialise," he added.
The Peugeot-GM alliance had sought to save cash through
joint purchasing, logistics and three programmes to develop
small cars and two minivan families, for introduction in 2016
On Thursday, the companies said a new multi-purpose vehicle
for both companies would be built in Zaragoza, Spain. A planned
C-segment crossover vehicle would be built in Peugeot's Sochaux
factory. Opel separately announced that a new vehicle would also
be built at its plant in Ruesselsheim, Germany.
In 2012, when GM paid $400 million to take a 7 percent
stake in Peugeot, the two carmakers even explored a full tie-up
of Peugeot and GM's European arm Opel, but these plans were
halted amid misgivings about the French carmaker's worsening
On Thursday, General Motors announced it was selling its
entire 7 percent Peugeot stake to institutional investors, and
the French auto maker said it was pursuing a deal with China's
Dongfeng Motor Group.
"Our equity stake was planned to support PSA in their
efforts to raise capital at the time of the creation of the GM
and PSA alliance, and that support is no longer needed," GM Vice
Chairman Steve Girsky said in a statement.
"The alliance remains strong with our focus on joint vehicle
programs, cross manufacturing, purchasing, and logistics,"
Juergen Pieper, analyst with Metzler Equities in Frankfurt,
said: "This partnership always had a defensive character. Two
weak players, Opel and Peugeot, thought they could combine to
become much stronger, but that isn't case here."
For GM it is the second attempt at forging a broad-based
alliance in Europe. Previously, it had sought to develop small
vehicles with Italian partner Fiat, but that venture
fell apart in 2005 and GM was forced to pay Fiat $2 billion to
dissolve the partnership.
Peugeot, its sister brand Citroen and Opel are among the
worst hit by a European car sales slump that put a $1.8 billion
dent in GM's 2012 earnings. Over the past 13 years, GM has
racked up losses of more than $18 billion in Europe.