Based on the hopes of driving down costs, two automakers announced an alliance last week. GM and PSA Peugeot Citroën will join forces by both sharing some vehicle platforms and combining their purchasing volumes for increased efficiencies.
This isn’t the first or likely the last time that automakers will cooperate with competitors to strengthen their competitiveness (French rival Renault is closely tied to Japan’s Nissan). The European market has been difficult for GM for some time. Recently, PSA Peugeot Citroën’s fortunes have not fared much better. Both companies are hoping that cost savings will return their European operations to profitability.
Most readers are aware of GM’s history, including its recent emergence from bankruptcy and return to profitability, assisted by the US Government. American readers are likely less knowledgeable about PSA Peugeot Citroën (PSA). Headquartered in Paris, PSA is Europe’s second largest auto manufacturer behind Volkswagen. The company produces vehicles on a global basis, with plants Asia, Africa, Europe, Russia and South America. Unlike GM, and more similar to Ford, PSA is majority owned by its founders, which in this case is the Peugeot family.
With 30% of the shares and in excess of 46% of the voting rights, the Peugeot family calls the shots at PSA. This means that any strategic alliance will have to be supported by the Peugeot family. In the past, large multinationals such as GM, with a history of high executive turnover, have not done well in nurturing long-term partners. Perhaps to counteract these natural tendencies, this alliance will be governed by a committee comprised of four senior executives from both companies.
While this alliance is broader than most, it should be noted that PSA already has a fair share of partners, including TOYOTA, Mitsubishi and Chang’an for production facilities in Russia and China. PSA also collaborates with BMW in the area of hybrid technologies.
The first product created through this alliance is expected to arrive in 2016. Unlike the Fiat/Chrysler partnership, this alliance is not expected to result in either Peugeots or Citroëns showing up at your local dealer. That is a shame, especially for anyone that enjoys daring automotive designs. Below are is my current favorite Citroën, the DS 4 R.
Photo courtesy of Citroën
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