Rumors Circulating of Peugeot-Citroën/General Motors Tie-Up

A number of European outlets are reporting that PSA Peugeot-Citroën and General Motors are in talks about a possible alliance. Although neither party has issued an on-the-record confirmation, the French labor minister told radio there that PSA is meeting with another automaker; GM has issued a routine non-denial in saying it regularly talks to other automakers to consider collaborative possibilities. Any deal would be far from the sort of deep blend we saw between Daimler and Chrysler, Fiat and Chrysler, or even Nissan and Renault. More likely is that GM and PSA would jointly design a small-car platform, or components such as engines and transmissions. They could, for instance, build a city car together; PSA's current city car twins, the Citroën C1 and Peugeot 107, were co-developed with Toyota, which markets the same vehicle as the Aygo. There are a few upsides to a potential PSA-GM joint project. Both companies need to reduce the costs of designing and building smaller vehicles. Working together could bring down the investment required for each company, and would also add volume. Volkswagen has committed eye-watering sums to the development of future products, and much of that money will likely go to vehicles that compete head-on with those from Opel, GM's European division, and PSA. BMW and Peugeot are concluding their collaboration on an engine, which came to the U.S. in the second-gen Mini and was sold in a variety of BMWs, Peugeots, and Citroëns in Europe. PSA also is carrying a huge amount of debt—about $4.5 billion—and a tie-up with GM would infuse some cash, save money in product development, and perhaps reassure creditors. With all of this said, we're not bullish on the prospect. Not because we think the next Chevy Malibu would become French—it wouldn't—but because Opel, Peugeot, and Citroën don't have unique expertise to offer the others. Yes, they can benefit from more scale and a shared small car, but otherwise there's just a great deal of overlapping product. All three brands are suffering in Europe, where Hyundai, Kia, and Volkswagen are growing their lineups and, in most segments, sales. The market may prove accurate Carlos Ghosn's prediction that the automotive industry is trending toward a handful of gargantuan manufacturers. But putting two sick automakers together—we're referring to Opel here, and not GM as a whole—may not be a successful answer to well-funded behemoths. from Car and Driver Blog http://blog.caranddriver.com

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