The partnership General Motors (via Opel) and PSA Peugeot/Citroën began in February has produced more declarations and revisions than easily identifiable positive movement. A deeper collaboration between Opel and Peugeot has been mentioned a few times, perhaps even a sale of one to the other, and a report in October laid out joint plans like a small MPV for Opel/Vauxhall, a small car for both Opel and Citroën and two new platforms for small and midsize cars.

What observers can't glean from the proclamations is how all this can happen with Peugeot in constant, and worsening, financial trouble. The French company just accepted a bailout from the French government, the cash position at its lending arm so bad that the interest rates it had to charge were pricing it out of the car-loan market, and a new report in Reuters says that Peugeot is losing $200 million per month.

That cash-burn rate is better than a few months ago, but the Reuters report explains that the French government loan is "sabotaging" any chance of a closer tie-up between the two companies, said to include the possibility of "a full combination of Peugeot with GM's European unit Opel." That particular option, with a $5-billion buy-in from GM, could have allowed GM to get Opel off its books by making it part of a separate entity. The French government's terms for the loan, however, mean that Peugeot can't shed workers and factories as it would need to in order to make the new entity, and any deeper ties with Opel, viable.

Beyond that, the plan to jointly develop a small car for Peugeot in Brazil has been shelved, Peugeot has left Iran, it's second largest global market, and has given up ties on other technology projects with Ford and BMW. GM has no interest in other Peugeot initiatives like a push into India and rechargeable hybrids. It's said that more cooperation between the two will have to wait for a turnaround in the European market, expected in 2014.


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  • 16 Comments
      johnb
      • 2 Years Ago
      this tie-up would be like grabbing an anchor on the titanic deck before jumping ship. :)
      SloopJohnB
      • 2 Years Ago
      Let. Peugeot. Die. Freedom Fries!!
        RGT881
        • 2 Years Ago
        @SloopJohnB
        lol. Yep I remember the "Freedom Fries" days and banning the French wine from being sold in US. Well I think majority of French understand how their government is digging a giant hole underneath them, and those have pretty much left. As for PSA; their situation is dire and it won't get better. Problem is similar to what GM was facing back in 2004-2005, legacy costs, commodity costs, labor costs, overcapacity, and stiff competition. Unfortunately, French government seems to think that everything is going to be okay, that status quo needs to be preserved and socialism will save the day. Not so much.
          Daniel D
          • 2 Years Ago
          @RGT881
          Well capitalism as represented in the US hasn't been a shining beacon of success either. Ford went to the brink and just turned around, while Chrysler and GM jumped off the cliff and needed the governments of both parties to intervene to stop them folding. Then there is the failing healthcare, transport and road networks in the US. My point is that you can find reasons to argue any system fails. The obsession of some autoblog readers to blame "socialism" basically for the world existing outside their borders is getting very tired.
          Hossi Blumengaarten
          • 2 Years Ago
          @RGT881
          even if the french are die hard socialist the world and most third worlds countries are capitalist in one way or another they cannot run, they are screwed
      Hossi Blumengaarten
      • 2 Years Ago
      Peugeot has left Iran, JEWS oh man those jerks just make things worse
        • 2 Years Ago
        @Hossi Blumengaarten
        [blocked]
      Erik Hans Dahlgren
      • 2 Years Ago
      Seems like any car company that GM gets involved with gets the shaft in one way or another. Isuzu, Saab, Suzuki, Opel...
        • 2 Years Ago
        @Erik Hans Dahlgren
        [blocked]
          Matthew Dawson
          • 2 Years Ago
          GM really only wanted Saab as a badge they could put on Opels, with the intent of selling them for twice as much and not spend any money. And in their deluded minds, that would somehow give them a rival to BMW. Meanwhile, the completely missed the fact that Saab was excellent at R&D, and the reason they were in trouble in the first place was that they weren't part of a larger corporation they could spread their costs over. As a new R&D department at GM, they could have been shockingly useful coming up with innovative designs for passenger cars and the clean-sheet stuff they did could have made its way into GM's many other brands. Instead, they were saddled with trying to make a bunch of old Opels into decent cars, and considering how much work they did on some it probably would have been cheaper and more effective to just let them start from scratch. What I'm getting at is, yes, Saab survived longer than it would have thanks to GM and GM did spend A LOT of money on them to "turn them around". But because GM failed to understand what Saab were best at, they pretty much doomed a turnaround to failure no matter how much cash they flooded Trollhattan with.
        RGT881
        • 2 Years Ago
        @Erik Hans Dahlgren
        Daewoo. GM got its highly desired Aveo! But that's GM's holier than thou approach, which is come with promise of benefits to those in turmoil, only to then dictate business on their terms. Don't forget GM's relationship with Fiat.
      laerte.cusma
      • 2 Years Ago
      Sergio Marchionne recently revealed that PSA, in their (undisclosed) budget plan for 2005, planned to harvest Fiat's market shares in Europe after Fiat's default. Maybe it is now Marchionne's turn to look at PSA's market shares...
      LMI500
      • 2 Years Ago
      This deal should have never existed, been thought of , or got off the ground. It makes no sense what so ever. I'm sorry but min-van platforms and, AND diesel technology??? GM already has diesel technology. Does anyone at all within GM remeber the Fiat debacle???!!! Billions of dollars were given to them so they could part ways.
        • 2 Years Ago
        @LMI500
        [blocked]
      timber
      • 2 Years Ago
      I'll keep the 205 GTI (in particular among others) in my memories... Citroen also has a very large pool of models to remember. PSA will survive if they stick around long enough for the Euro market to recover.
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