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Peugeot/GM partnership firmed

2012-12-21 11:25

GETTING PENNY WISE: Peugeot and GM have agreed on a deal that will see the two companies not only develop new cars,but curb more than R17-billion in spending.

 
General Motors and Peugeot Citroen are to develop jointly three compact-vehicle platforms for market in 2016.

They will be for Peugeot and GM's Opel/Vauxhall brands in Europe but will be "highly differentiated" to maintain identities. Part will be sourced from Europe.

Other projects are being considered in Latin America and other growth markets, the companies said in a joint announcement, but the target for Peugeot is to save the equivalent of about R8-billion.

Peugeot is also reiterating a target for operating cash flow to reach break-even by the end of 2014.

TIGHTENING THE BELT

Paris-based Peugeot, and GM, are struggling to become profitable in Europe as the car market there shrinks, are targeting more than R17-billion in annual cost savings and earnings improvement with the 10-month-old alliance.

Marc-Rene Tonn, an analyst at Warburg Research in Hamburg, Germany, said: "The positive effects of what's been announced will take time to materialise. Their R17-billion synergy target is a very ambitious one."

Peugeot said earlier in 2012 that its automaking operations were burning through the equivalent of R2-billion a month. The company sold a 7% stake to GM in March 2012 as part of the alliance announced the previous month, making the Detroit-based company Peugeot's second-biggest investor.

GM and Peugeot will develop common chassis and other major parts for a compact crossover for the Peugeot brand and a multipurpose vehicle for Opel and Vauxhall, a platform for sub-compact multipurpose vehicles for both partners;and low-emission technology for the next versions of the brands' sub-compacts in Europe and other regions.


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