By on October 24, 2013
The next Citroen C3 and Peugeot 208 will not share a platform with Opel's Corsa as originally planned

The next Citroen C3 and Peugeot 208 will not share a platform with Opel’s Corsa as originally planned

In the wake of news that China’s Dongfeng Motors is going to take an equity stake in PSA/Peugeot Citroen, the French automaker says that it is scaling back its alliance with General Motors, which owns 7% of PSA. PSA said that a planned joint subcompact platform that was seen as the basis of the tie-up with GM will probably be cancelled. “Further analysis showed that the business model just wasn’t there,” a PSA spokesman said. Financial statements released by PSA say that anticipated savings of $1 billion due to synergies with GM will be adjusted downward.

The cancelled platform was supposed to have underpinned replacements for the Peugeot 208, Citroen C3 and Opel Corsa. Barclay’s analyst Kristina Church said that a common small car was “absolutely key” to the partnership.”It certainly seems GM has no focus on the alliance with Peugeot any more. They don’t want to be partnered with a struggling company, and they have alternative methods to turn things around [in Europe],” Church said.

Still, GM and PSA spokesmen said that the alliance is going forward. “We have other projects under review. Some projects are not economically feasible, which is why they are dropped, but we’re taking the projects one-by-one and examining their economic feasibility first,” a PSA rep said. The companies will still produce a jointly developed small minivan at GMs Zaragoza, Spain factory starting in 2016. “We are moving forward with the implementation” of the projects which have already been agreed upon, Ulrich Weber said for GM.

The deal with GM was originally a main part of PSA CEO Philippe Varin’s strategy to turnaround the struggling French carmaker. Working with a company of GM’s size was seen as a way of reducing costs. After GM took a 7 percent stake in PSA in February, 2012 the automakers announced plans for at least five joint vehicle and powertrain programs. However, soon afterwards, GM revealed that SAIC, it’s partner in China could veto some of the plans.

Remaining are the upcoming small minivan and another joint vehicle development program working on a crossover, along with joint purchasing. PSA did say that so far joint purchasing has saved the company about 60 million euros so far this year.

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15 Comments on “PSA: Business Model for Joint Small Car With GM “Just Wasn’t There”...”

  • avatar
    Big Al from Oz

    PSA will need to save more than 60 million euros a year.

    Also, when two major companies invest a lot of resources on platform or model sharing both companies will want the other to be successful. If the ‘opposition is successful it will improve your bottom line.

    GM doesn’t view PSA as a good investment. On the other hand Dongfeng have gotten their hands on some good western small car technology that will be the main driver behind the future Chinese vehicle market.

    • 0 avatar

      What unique small car technology? The ability to have a car that is done for after 50,000 miles?

      PSA doesn’t seem to have anything special. Maybe the compressed-air hybrid they are working on, but this isn’t related to small cars only.

      • 0 avatar
        Big Al from Oz

        If you aren’t aware the Chinese up to a year ago or so couldn’t even hydroform. They were making a chassis in two pieces and welding them into one unit for some vehicles.

        The Chinese were even having difficulty working aluminium body panels.

        The Chinese are where they are by importing manufacturing technology.

        The Chinese still can’t make turbine blades for next generation aircraft.

        Metallurgy, materials technology, etc the Chinese can’t compete, yet.

        • 0 avatar


          I think we are lucky to live elsewhere in the world where we have access to fine small cars for which we can have respect and admiration. Peugeot have always purveyed fine small cars with good driving dynamics and lots of technology that makes them very safe places to be. The way things are going though, soon many in those countries with no such experience, will be able to join the pleasure and pain of small car ownership.

          • 0 avatar
            Big Al from Oz

            I have a soft spot for Peugeots’.

            For a French manufacturer they have done relatively okay in Australia and have a following similar to but larger than the Alfa fans.

            I view Alfa fans people who learn to appreciate unreliability and love to walk :-)

            Many Australians feel in love with the French diesels.

            There was a guy who lived around the corner from me and used to restore Peugeots.

        • 0 avatar

          teh method of building bodies isn’t soemthing only PSA has. the method to produce actually mostly comes fromt he manufacturer that makes the mahcines. the car OEM didn’t invent how to stamp parts, or weld body panels. tha tcomes from the machinery manufacturer that makes the machines and robots. Like Thyssen, siemens, etc…..

          so for jsut the ability to produce a car part or assemble, they can just buy from thyssen et al.

          what they buy from PSA is the design of the car, the technology (i.e. motors). and that is the questionable part.

          Maybe the fact that they are bankrupt shoudl give a hint that their cars probably are not the best.

          • 0 avatar
            Big Al from Oz

            Or the business was poorly managed.

            Bad product design isn’t the only factor.

            Manufacturing tech is probably as highly protected as product development.

            I do know in some case manufacturing technology is more protected than the product.

  • avatar

    GM has a long history of poor major decisions and failed alliances, ho-hum, this is just another one. Like most of them, it was a dumb idea at the start, a dumb idea in the middle, and a dumber idea in the end. Everyone on the outside could see that. GM’s ‘upper management credibility’ continues to be near zero. GM’s culture continues to be a significant, majority-amount of Old GM. The only reason its vehicles are as good as they are right now is the effort from the bottom, because certainly, the Top is working against them.

    • 0 avatar

      Major. This partnership can’t really be called a Major screwup when compared to the huge cost if other ones; Fuji Heavy Industries, Fiat, Saab, Isuzu, and Suzuki. Now those could be classified as major decisions that were stupid, costing GM BILLIONS vs the $125 million in stock options with PSA.

      Now compared to earlier deals this actually look restrained and measured. They may actually not lose billions and billions of dollars on this one.

  • avatar

    Is it just me or does the rear door handle line up improperly with the front one, as well as the character line across the shoulders of the car?

  • avatar

    ”It certainly seems GM has no focus on the alliance with Peugeot any more. They don’t want to be partnered with a struggling company, and they have alternative methods to turn things around [in Europe],”
    Seriously? When did GM decide that PSA was struggling, before or after they invested in them? What a load of BS. GM knowingly got into bed with a very weak PSA much to the consternation and confusion of the best and brightest here and now they decide they want to back out. What a huge waste of limited capital.

    • 0 avatar

      Initially, GM appeared to be setting up PSA as a place to dump a failing Opel, as it planned to build its European sales with Korean-made Chevys.

      But Chevy has had disappointing sales in Europe, while South Korea is becoming less attractive by the day. So now the resources are moving back to Opel, while expectations for GM Korea are being downgraded.

      With the new gameplan to fix Opel, the PSA relationship loses its value.

  • avatar

    Yet another automaker selling out to the Chinese. Did someone pay Victor Muller top bucks in order to come up with this immensely brilliant strategy? Or was it masterminded in-house by those responsible for nearly running PSA into the ground?

    Whatever happened to competent leadership, and valuing the importance of retaining strategic assets…

    • 0 avatar

      There was no one mastermind involved in running PSA into the ground. It was a combination of the Euro, incredibly anti-competitive government work rules, the emergence of eastern Europe as low cost competition, and European demographics. Renault partnered with Nissan which has a strong leadership, and embraced global sales in time. You might blame the Peugeot family for their reluctance to give up control, but PSA needed a strong partner and expansion into global markets long ago.

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