General Motors and PSA Peugeot Citroen will seek to squeeze a joint $2bn annually from a global platforms-to-purchasing alliance, but the savings will not be fully realized for five years.
The deal unveiled last night calls for GM to buy into a roughly €1bn capital increase by Peugeot, which will make the US car giant the second largest shareholder in the French group behind the founding Peugeot family. GM will take a 7 percent stake in Peugeot, Europe's second-biggest automaker, and the two companies will pool research and development, vehicle platforms and technologies.
The alliance will focus on small and midsize passenger cars and crossovers. The cost gains from the deal, which will coincide with the joint development of new vehicle platforms, will be limited in the first two years but will eventually total $2bn a year, split about equally.
The plan has met with widespread investor skepticism as the outlines of the transaction leaked out in recent days. Both car makers have excess capacity of about 25 per cent in Europe, according to analysts. GM's European operations lost $747m last year, while Peugeot's core auto division was €497m euros in the red in the second half.