Officially Official: GM Purchases 7 Percent Of Peugeot, Allows For Platform Sharing

The speculation can finally end, as General Motors and PSA Peugeot Citroën have announced today the terms of a global alliance. General Motors seems to be the winner here, purchasing a 7 percent stake in PSA Peugeot Citroën for a total of $335 million. As a result, the company expects to save approximately $2 billion annually between both partners within about five years — a move that is expected to bring GM Europe to profitability.

Under the terms of the agreement, GM and PSA Peugeot Citroën will begin sharing selected platforms, modules and components on a worldwide basis in order to achieve cost savings, gain efficiencies, leverage volumes and advanced technologies, as well as to reduce emissions. The cost savings will come in the form of a larger sourcing and purchasing operation; combined purchases are estimated at $125 billion a year.

Initially, GM and PSA Peugeot Citroën intend to focus on small and midsize passenger cars, MPVs and crossovers. The companies have also expressed interest in developing a common platform for low-emission vehicles. The first vehicle on a common platform is expected to launch by 2016.

We should point out that while this deal may bring cost savings to the table for both automakers, it does nothing to solve the major overcapacity issue hindering the European market as a whole.