GM and PSA Peugeot-Citroen Officially Form an Alliance, Fiat Still Wants In

Well, that didn’t take long, did it? Only a week after the first report that General Motors and PSA Peugeot-Citroen were discussing a possible alliance in order to cut their costs and improve their performance in Europe and other regions, the two companies announced today that they have reached an agreement.

The global alliance between the world’s number one car manufacturer and Europe’s number two automotive group involves two main topics: the sharing of platforms, powertrains and modules, and a joint venture for the sourcing of US$125 billion worth of parts and services from suppliers.

GM will acquire a 7 percent stake in the French group, which is slightly higher than the 5 percent originally reported, but still enough to make it the second largest shareholder behind the Peugeot Family Group.

“This partnership brings tremendous opportunity for our two companies”, commented GM chairman and CEO Dan Akerson. “The alliance synergies, in addition to our independent plans, position GM for long-term sustainable profitability in Europe.”

Philippe Varin, chairman of the PSA Peugeot Citroen managing board, said: “This alliance is a tremendously exciting moment for both groups and this partnership is rich in its development potential.”

The agreement stipulates that the two groups will share select platforms, modules and components “on a worldwide basis” so as to achieve sizeable savings due to the economies of scale.

In fact, while they don’t expect significant cost savings in the first two years, the two automakers estimate that within five years, the equally-shared synergies will save them about US$2 billion annually.

The first models to be developed under the new agreement will be small and mid-size cars, MPVs and crossovers, with a common platform for a low-emission vehicle being under consideration. The first vehicle is expected to launch in 2016.

And that’s not all: Sergio Marchionne, CEO of the Fiat-Chrysler group, has had talks with both companies about possible tie-ups during the Detroit Motor Show and as reported by Detnews today, he's still interested in a collaboration with PSA Peugeot-Citroem

Now it seems that his company has been left out in the cold to face the hardships of the falling European market alone. Furthermore, the access to the U.S. and other markets, like China, where GM is dominant will now be available to the French and not the U.S-Italian group.

Marchionne is not one to give up so easily, though. And he already has a starting point: currently Fiat and Peugeot have a joint venture building light commercial vehicles. He can also count on the support of European leaders, such as German chancellor Angela Merkel, who want to deescalate the financial crisis that is storming the EU and ensure the future of the euro.

So, to sum it up: GM and PSA will form a global alliance, with the Americans relying on finding a way to save Opel and Vauxhall and the French on increasing their volumes, lowering costs and accessing new markets. Nevertheless, it may be not over yet, as Fiat still wants to play despite having a troubled history with GM…

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