GM-Peugeot alliance; just where is it going?

Opel Vauxhall’s new Adam city car, (shown here) and the small Mokka SUV are crucial to GM Europe’s turnaround plan

In early January, the Wall Street Journal headlined a story “GM, Peugeot Plan Deeper Car Alliance” and reported that the participants would broaden and deepen their attempt to solve chronic losses at Peugeot-Citroen and GM Europe. The story reiterated the earlier news that the original plan for cooperating over four  platforms had been reduced to three, while a deal on making three-cylinder gasoline engines would go ahead. There was “potential” for more cooperation in Russia and South America, a new vehicle “might” be produced for Latin America, while small commercial vehicles “might” be on the cards one day. Not much actual broadening and deepening there, at least not yet.

In December, the two companies announced they had scaled back some cooperation plans. Deutsche Bank said then that meant the combination either had limited ambitions, or that the partners had differing visions of what could be achieved.

That news also seemed to finally shoot down more feverish rumors which emerged in October that GM, which has a seven per cent stake in Peugeot-Citroen, was thinking of merging its Opel-Vauxhall subsidiaries into the French company. The French newspaper La Tribune reported that GM would take a 30 per cent stake in a joint venture and inject up to $10 billion. At the time, this idea was ridiculed by those who said it made no sense to merge two companies which had already generated such horrendous losses. Opel-Vauxhall is expected to have lost more than $1.5 billion last year, to add to the $16 billion it has consumed over the last 12 years. Peugeot-Citroen was likely to have lost at least $1.9 billion in 2012.

GM and Peugeot-Citroen announced in December that they had dropped plans for a fourth joint large vehicle program, but were broadening plans to work on a new generation of three-cylinder gasoline engines.

Opel’s current large car is the Insignia, which sells in the U.S. as the Buick Regal. Peugeot’s larger sedan is the 508, and Citroen has the C5.

The joint vehicle programmes now include a compact SUV and Minivan, a small “multipurpose” vehicle, and a fuel efficient small car. A joint purchasing deal for Europe had been agreed, subject to anti-trust approval.

Deutsche Bank said the joint purchasing deal will not be global and will be limited to Europe. The bank said the proposed alliance looked less ambitious, or confused.

“Overall, this global strategic alliance looks very limited. And we wonder if each partner ever had the same vision on this alliance from day one,” the bank said in the report in December.

Not much has changed since then, has it?