In a bid to bolster flagging European operations, General Motors has acquired a seven per cent share in PSA Peugeot Citroen as part of a global alliance that will enable both firms to share platform technology.
The acquisition will technically make the General the second-largest shareholder in PSA Peugeot Citroen behind the Peugeot family. General Motors will not gain any form of governance over PSA Peugeot Citroen as a result of this acquisition and the two firms will continue to compete against one another in the European market.
So what benefits does this deal hold for the two firms? Firstly, it gives both of them a serious shot in the arm in terms of purchasing power when it comes to sourcing raw materials and other services. The combined purchasing volume will be a significant $125 billion (about R935 billion), which GM claims will translate to savings of around $2 billion (about R15 billion) within five years. Platform sharing (most likely B-segment, C-segment and MPV/crossover underpinnings) will contribute to the aforementioned savings with the first products likely to emerge during 2016.
The move has received a mixed reception from industry analysts – some suggesting that the alliance will breathe new life into the Opel brand while others point out that the major problem facing European carmakers – overcapacity – will only be exacerbated by the alliance.
