September 4, 2012 / 7:49 PM / 7 years ago

GM waters down Peugeot alliance plans: report

FRANKFURT/PARIS (Reuters) - General Motors (GM.N) has backed away from tentative plans to share its mid-sized car technology with PSA Peugeot Citroen (PEUP.PA), a German magazine reported on Tuesday, potentially weakening the rationale for a broad alliance being negotiated by the two automakers.

The Peugeot logo is seen at the entrance of a car dealership in Nice, southern France, July 19, 2012. REUTERS/Eric Gaillard

As part of a partnership announced in February, it was expected that mid-sized cars such as the Opel Insignia and PSA’s Citroen C5 and Peugeot 508 would draw on GM platforms, with the cars to built at Opel’s Ruesselsheim plant in Germany.

But now managers at GM China and Buick are vetoing the plan for fear the French models would compete too much with their own vehicles, Germany’s Spiegel reported, without saying where it got the information.

That would leave Opel building just the mid-size model for its own brand and the Buick, which would not make sufficient use of capacity at Ruesselsheim, the report said.

A spokesman for GM’s Opel division declined to give details of the ongoing alliance talks with Peugeot but appeared to play down expectations that a final deal would include shared manufacturing.

“It would be premature to assume that anything had been agreed upon before and has now been reversed,” the spokesman said, adding that discussions were continuing with an emphasis on cooperation in purchasing, logistics and product development.

“We’re very much focused on those three areas,” he said.

Peugeot declined to comment on the report.

GM and the French automaker announced the partnership in late February with the goal of saving at least $2 billion annually within five years, split about equally between the partners.

Both Peugeot and Opel are struggling with falling sales, losses and overcapacity in Europe.

Reporting by Victoria Bryan in Frankfurt and by Laurence Frost in Paris; Editing by Steve Orlofsky

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