LUCA CIFERRI

GM-PSA deal looks a lot like failed GM-Fiat pact

Luca Ciferri is Automotive News Europe's chief correspondent
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The alliance between General Motors and PSA/Peugeot-Citroen mirrors the deal GM made with Fiat back on March 13, 2000.

Back then, the mantra was: "Allies on costs, competitors in the marketplace." The wording in Wednesday's announcement by GM and PSA was essentially the same: "Each company will continue to market and sell its vehicles independently and on a competitive basis."

Like the GM-Fiat deal, GM and PSA will share vehicle platforms, components and modules as well as form a global purchasing joint venture.

GM and PSA say that in five years each will save about $1 billion annually because of the alliance's synergies. That is the same figure GM and Fiat aimed to reach after five years, but the alliance was dissolved by 2005.

There are a couple of differences between the pacts.

    • GM-Fiat immediately formed a 50-50 joint venture on powertrains while GM and PSA have no powertrain pact right now. PSA already sources gasoline engines to BMW's Mini brand and cooperates with Ford on diesels. PSA would have to unravel those deals before starting any engine partnership with GM

    •  GM purchased a 20 percent stake in Fiat Auto for $2.4 billion, which Fiat's parent used to buy 5 percent of GM common stock. GM also agreed to a "put-option" that required it to take the remaining 80 percent of Fiat Auto. This time, GM only plans to buy 7 percent of PSA for an estimated $400 million to $470 million. PSA will not take a stake in GM.

A reason why the GM-Fiat deal collapsed is because both automakers were hit by financial troubles at the same time. The situation in Europe today is much worse than in 2000, therefore any alliance should result in quick and positive changes. We won't see that from the GM-PSA deal considering that the first car off a shared platform is at least five years away.

The only bright side for GM is that this deal does not include a put option, which forced the U.S. automaker to pay Fiat $2 billion to end their marriage.

You can reach Luca Ciferri at lciferri@crain.com.

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