Mike Stevens | Mar 1, 2012

General Motors and PSA Peugeot Citroen announce broad-scale global development and production alliance.

It's an approach as old as the automotive industry itself; sharing platforms, powertrains and technology, all with a view to cutting costs and filling holes in the line-up.

In the current market, where costly advanced technologies and affordability must come together, it's the only way to do business. This time, it's General Motors and PSA Peugeot Citroen.

Announced this week, the alliance will see GM take a seven percent equity stake in PSA, making it the second-largest shareholder after the Peugeot Family Group. The share will cost GM between $400 and $470 million.

The deal will see the two carmakers sharing existing platforms and developing new architectures and components.

Small and mid-sized cars will be the focus in the beginning, along with MPVs and crossovers. A new platform is also planned, with the first models using the new architecture expected to launch by 2016.

A global purchasing joint venture will also be formed in order to secure greater buying power with materials and parts suppliers. Together, the two companies claim a combined annual purchasing volume of around $125 billion.

Although limited in the short term, GM and PSA expect to save around a combined $2 billion in costs annually.

Peugeot has a number of existing partnerships, including engine deals with BMW and Ford, and a commercial vehicles deal with Fiat.

The alliance with Peugeot is GM's first new deal with an automaker since its 2009 bankruptcy, when it killed off the Pontiac and Hummer brands and sold off the Saab brand.

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