PSA Peugeot and General Motors to form a strategic alliance

Europe’s second largest carmaker, PSA Peugeot Citroen is in talks with the US based General Motors regarding a strategic alliance to join forces for building cars and components in Europe. Last week, the company reported decline in profit and increased debts.

“In the context of its globalisation strategy and improving its operational performance, PSA Peugeot Citroen looks at potential co-operations and alliances” a spokesperson of the Paris-based company said in a statement. “Discussions are taking place and there can be no certainty at this stage that these discussions will result in any agreement” the spokesman added.

In the reports, Peugeot declared the losses mounting to 1.65 million Euros as the company battles with dropping sales and raging fuel prices for small car segment in Europe. The joined alliance could be a good strategy to conquer Europe market where on one hand Peugeot reported last week of selling 1.5 billion Euros worth assets to reduce debt. And on the other hand, General Motors, arguably the world’s largest carmaker is compounding heavy losses with its much less successful model Opel/Vauxhall.

PSA Peugeot and General Motors to form a strategic alliance

The alliance  is likely to provide immense help to Peugeot and GM’s Europe division, by adopting heavy restructuring to reverse the debts they have been mounting over the current slack in auto industry. The joined forces could also work in developing engines, transmission systems and vehicles that would be sold under their respective brands. However, it is just a speculation now. PSA Peugeot and General Motors have not yet signed any agreement, but we can expect an official announcement at the 2012 Geneva Motor Show.

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