Official: GM ties the knot with Peugeot-Citroen
Kaustubh Shinde, They say sooner or later your passion finds you. Sometime in late 2009, I started writing for IAB and ever since then it has been a roller coaster ride for me. An amazing experience that has taught me a lot, taken me to new places, driven some great cars and met some amazing people. When you don't find me on IAB (very rarely), you will find me either at a coffee shop or an eatery or at the nearest gadget store. Hope you enjoy IAB as much as we do!
If you have been tuning into IAB, this shouldn’t come as a surprise. After countless speculations, General Motors – world’s numero uno manufacturer has officially tied the knot with Peugeot-Citroen, Europe’s second biggest manufacturer.
What’s the Deal?
- General Motors will pay around $400 million for a 7 percent stake in French automaker PSA Peugeot Citroen.
- Deal will make GM the second largest shareholder in PSA, after the Peugeot family, which holds around 30 percent.
- The shares won’t give GM any governance rights over PSA
- The deal is expected to close and take effect by the second half of this year.
Why did they do it?
- GM’s European operations has been constantly bleeding money. Money-losing German Opel unit needs the support of PSA for a new product direction.
- PSA is under heavy debts. It needs to support of a big manufacturer to develop new technologies and products.
What will come out of it?
- Two pillars around which the deal is built: platform sharing and purchasing.
- By merging their $125 billion in purchasing power they hope to keep supply costs down.
- Synergies resulting from the alliance will save approximately $2 billion annually within about five year
- Joint development efforts will focus initially on small and midsize passenger cars, MPVs and crossovers.
- The carmakers may also develop a new common platform for low emission vehicles, with the first model expected to debut in 2016.