GM-PSA talks slow while economy worsens, report says
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NEW YORK (Bloomberg) -- General Motors Co. and PSA/Peugeot-Citroen's efforts to deepen their alliance have slowed recently amid a worsening European auto market and complicated regulatory review, people familiar with the matter told Bloomberg.
The companies have already missed a June 30 deadline on the parts-buying plan. The automakers also aimed to announce as soon as this week at the Paris auto show more details on plans to jointly build four model lines using common underpinnings and to combine purchasing efforts, said the people, who asked not to be identified discussing internal negotiations.
The weakening European economy and the companies' different processes for developing cars have hindered progress, the people said, underscoring the challenge of synchronizing operations in an industry where products are planned years in advance. The automakers outlined in February a sweeping alliance to save $2 billion a year. GM bought 7 percent of PSA in the deal.
"Things are going very well," Johan Willems, a GM spokesman, said on Wednesday in a telephone interview. The purchasing plans are awaiting antitrust approvals, he said. "We're going through that, and it doesn't make sense to do anything, to sign anything definite, until these things are done. From our perspective, we are on track."
The companies hadn't planned to reveal greater details this week, said Kelly Cusinato, a GM spokeswoman. Jean-Baptiste Mounier, a PSA spokesman, declined to comment.
October deadline
GM said in a filing with the U.S. Securities and Exchange Commission it aimed to sign agreements with PSA on product-development, vehicle-supply and powertrain-supply plans by the end of October.
GM announced a logistics agreement with PSA on July 2, more than two months after the April 30 deadline set out in the automakers' Feb. 29 master agreement filed with the SEC.
Willems disputed the idea that Europe's worsening economy is slowing the alliance efforts.
"There's a lot of pressure for ourselves to deliver and not to slow things down," he said.
GM's European unit Opel has looked at basing most of its model range on platforms developed by PSA, said one of the people familiar with the talks. The next Opel Astra hatchback, the unit's best-selling model and competitor to the Peugeot 308, won't use PSA underpinnings, because it's too far along in development, the person said.
Early announcement
The alliance was announced on Feb. 29, weeks before either automaker planned because of leaks about the talks, said one of the people. This left more terms to be worked on than is typical after a deal is made public, the person said. Vehicle sales, pricing and economic conditions in Europe have also been worse than either side forecast when the agreement was struck, the person said.
GM has been trying to fix its European business since the 1990s. The world's largest automaker has lost $16.8 billion in Europe since 1999. PSA is trying to turn around its automotive operations as it burns through 200 million euros in cash per month and its shares trade near a 23-year low. The French automaker is cutting 8,000 jobs and closing a factory on the outskirts of Paris.
PSA's shares have tumbled 57 percent since the alliance was announced, while GM has lost 11 percent. For the year, GM shares have gained 15 percent.
The two are also looking at combining some back office functions to lower costs in the face of tougher economic conditions in Europe, one of the people said.
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