The Odd Couple: PSA And GM In Alliance Talks
GM and PSA Peugeot Citroen have a mutual problem: Losses in Europe. Now, the two want to share the burden. General Motors and PSA are discussing a broad manufacturing alliance, if today’s media reports from Europe are to be believed.
PSA and GM?
Number 2 in Europe PSA had been looking for a partner for years. The logical ally used to be Fiat. At the Detroit Motor Show, Fiat CEO Sergio Marchionne told Reuters that
“he would be willing, in principle, to be part of a consolidation that would create another car company in Europe rivaling Volkswagen AG in size.
“If you take two of the European players and put them together, you’re going to get the right answer,” Marchionne said.”
Using that math, the options are limited. Even if you add the largest European players, none of them would eclipse the European juggernaut VW. Fiat’s and PSA’s EU market shares, added together, would be 19.6 percent, not enough to out-do Volkswagen’s 23.9 percent share.
There is just one combination that comes a bit closer to the target, and that is PSA and GM. Their combined share would be 19.9 percent. Neither GM nor PSA are thinking of merging though.
The talks are about sharing vehicles and parts, and not about a capital tie-up, Reuters says.
In the meantime, analysts in Europe are scratching their heads and ask: Why?
Peugeot and GM’s Opel suffer from overcapacity in Europe, while facing painful restructuring and militant unions. Both agonize under too much exposure to a stagnant EU market. Which makes Credit Suisse analyst Erich Hauser wonder:
“We struggle to see how yet another ‘me-too’ cooperation with GM Europe on componentry will help address any of the fundamental issues.”
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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If capital is tied up in supporting overcapacity, it is not being deployed toward things like new product development, so when the market rebounds, they may end up with production capacity but nobody interested in buying their undeveloped cars.
Nobody thinks Opel isn't being discussed? Imagine what what Citroen designers could do with those solid German underpinnings.
I think they could make a business case for building the DS-3 over there, then shipping it over here with a quick brand-swap as a Buick.
Well I think the goals of this alliance are : for GM, -Main Goal: Enter in the European Commercial Vehicles Market (PSA has 25-28 % EU Market share) and sell Technology (Especially Engins to PSA Commercial Vehicles Branch). -Others goals: Conquer the European Car Passenger Market with an important ally (Opel has no succes) -Rivalize with VW and FIAT in Europe... -Have common projects in China, where PSA is trying to enter. for PSA, C -Replace Chrysler engin supply partnership for Commercial Vehicles (Ending in 2017 and announced by FIAT when the fusion with Chrysler take place) -Enter again in the Indian market, participate in the US market in the long term and eventually, enter in the Chinese Market with GM cooperation... -Reduce CV cost by cooperation. And finally and less important, say to FIAT-Chrysler, thanks we have a new partner, LOL! Seriously, this alliance is not a Passenger Car issue, is a Commercial Vehicles issue, sector where PSA is strong in Europe, you analysis is quite biased, because PC will not be really concerned. Here the statistics.... http://www.acea.be/news/news_detail/new_vehicle_registrations_by_manufacturer/ and an article (in French) where Peugeot PSA CEO talks about looking for a partner for utility vehicles and other CV that are expensive to produce and develop alone... http://www.usinenouvelle.com/article/psa-cherche-partenaire-dans-le-vehicule-utilitaire.N167613