Peugeot and GM change alliance plans

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Peugeot and GM change alliance plans

Peugeot and GM change alliance plans
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General Motors and Peugeot Citroen have announced the revised terms of their joint venture.

Plans to produce a mid-sized car have been scrapped, but they will develop three vehicle platforms, and will share engines.

The first models are due to go on sale in 2016.

The cooperation – including a purchasing joint venture in Europe – is intended to reduce costs and re-energise their businesses.

The shared three-cylinder engines, designed to comply with Euro VII emissions standards entering force around 2019, will bring big savings for both partners, Peugeot said, without giving details.

The GM-Peugeot alliance plan, announced in February, has drawn investor scepticism as the French carmaker’s finances worsen, prompting thousands of domestic job cuts. They are taking place under close supervision by Socialist President Francois Hollande’s government.

Earlier in the year, Detroit-based GM took a seven percent stake in Peugeot in a capital increase by Europe’s second-biggest carmaker, as it burned through nearly 200 million euros a month.

GM is also struggling to stem losses in the depressed and highly competitive European market.

Talks on a deeper tie-up were halted last month as Peugeot’s crisis worsened, sources with knowledge of the matter have told Reuters.

GM and Peugeot had faced a year-end deadline to reach firm agreements on proposed joint programmes or scrap them to pursue their own projects.

They are due to give an update next month on their cooperation plans as well as the $2 billion in estimated annual savings both companies touted when the alliance was first unveiled.

Since then, the partners have put aside joint plans to develop a small car for Latin America, a dual-clutch gearbox and now the tentative mid-sized car programme.