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General Motors & PSA Create an Alliance


By:

29. February 2012

 

Who would have imagined? The same week that a French film scored big at the Academy Awards (The Actor picked up statuettes for Best Film, Best Actor, Best Director) General Motors and PSA Peugeot Citroën “announced the creation of a long-term and broad-scale global strategic alliance that will leverage the combined strengths and capabilities of the two companies, contribute to the profitability of both partners and strongly improve their competitiveness in Europe.”

Mon dieu!

Let’s face it: By and large, there are probably as many people in the U.S. who are as familiar with actor Jean Dujardin as they are with PSA. Briefly, with worldwide sales of 3.5-million units in 2011, it is Europe’s second-largest carmaker.

Essentially, Dan Akerson, GM chairman and CEO, said that the alliance—and he stressed that it is an alliance, not a merger—will mean “more products and technologies to more markets more quickly.”

GMPSAPeugeotCitroenAlliance01.jpg

Akerson & Varin

This is predicated on, he said, “huge economies of scale.”

What it basically comes down to is that there will be sharing of vehicle platforms, components and modules, and a leveraging of combined purchasing power for commodities, components and services.

GM vice chairman Stephen Girsky suggested that in about five years, when the alliance is hitting on all cylinders, the savings that will be realized from the synergies between the two companies will be on the order of $2-billion.  Savings will be realized through such things as materials, logistics, capital, and engineering.

Philippe Varin, chairman of the managing board of PSA Peugeot Citroën, who spoke of the “cooperation and savoir faire of our teams,” said that this will allow his company to develop “vehicles that we wouldn’t have been able to do alone.”

The companies said that there will be a focus on small and midsize passenger cars, MPVs, and crossovers. Which pretty much cover the growing categories of vehicles. (Realize that each of the companies will continue to develop specific products for their respective markets independently.) They believe that there will be a vehicle on a common platform by 2016.

A few things occur. Remember when GM was considering selling Opel? Now it is acquiring a 7% equity stake in PSA.

The two companies calculate that there will be combined annual global purchasing volumes of “approximately $125-billion.” To be sure, there are the aforementioned “huge economies of scale,” but here is hoping that it also doesn’t mean that suppliers will be beaten down into submission, predicated on the “Whaddaya mean you don’t want to cut that price? Don’t you want to supply this enterprise?” Bigger doesn’t necessarily mean better, and there are a whole lot of customers who have access to an array of vehicles who don’t necessarily care about corporate synergies.

Excellence is the same in both French and English.

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