General Motors and PSA Peugeot Citroën have created a global strategic alliance to improve the competitiveness of the both companies in Europe.
Each company will continue to market and sell its vehicles independently but will share the same vehicle platforms, components and modules. Due to this sharing, the companies want to achieve cost savings, gain efficiencies, leverage volumes and advanced technologies and reduce emissions. The alliance will also create a global purchasing joint venture for the sourcing of commodities, components and other goods and services from suppliers. The combined annual purchasing volumes are estimated to be approximately $125 billion.
Philippe Varin, chairman of the managing board of PSA Peugeot Citroën, said, “This alliance is a tremendously exciting moment for both groups and this partnership is rich in its development potential. With the strong support of our historical shareholder and the arrival of a new and prestigious shareholder, the whole group is mobilized to reap the full benefit of this agreement.”
GM and PSA Peugeot Citroën will primarily focus on small and midsize passenger cars, MPVs and crossovers. It’s possible that the companies will also develop a new common platform for low emission vehicles. The first vehicle on a common platform is to launch by 2016. The both automakers will continue to run their sustainability initiatives independently.
The companies will also act as one global purchasing organization buying commodities, components and services from suppliers. Integrated logistics and transportation will also be possible. Now, GM is expected to establish a strategic cooperation with Gefco, an integrated logistics services company and subsidiary of Peugeot Citroën. Gefco would provide logistics services to GM in Europe and Russia.
The alliance total synergies are predicted to be at approximately $2 billion annually within about five years and to be shared evenly between the two companies.