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.