(Corrects paragraphs 2 and 6 to say deal was agreed in February
2012, not February 2013)
By Edward Taylor
FRANKFURT Dec 12 General Motors scaled
back its alliance with Peugeot 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 of a deal that was agreed in February 2012 but said
the alliance could still offer up new opportunities.
In a joint press release on Thursday, the car makers
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.
Work to develop a light commercial vehicle, a multi-purpose
people carrier and a crossover SUV would continue, they said.
But PSA 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 announced in February 2012.
"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," Ellinghorst said.
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
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 those
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.
(Editing by Anna Willard)