GM and Peugeot announce alliance


US auto giant General Motors and PSA Peugeot Citreon have announced a global alliance that both firms say will save them $2 billion annually within five years and see them start launching vehicles together from 2016.

Under the deal, General Motors (GM) will acquire a 7 percent stake in Peugeot, making it the second largest shareholder in the Paris-based auto maker after the Peugeot family, the BBC reports.

The alliance will see the firms share vehicle platforms, component and modules, and create a global procurement joint venture to buy commodities and parts with a combined purchasing power of $125 billion a year, according to The Financial Times.

Peugeot’s Gefco logistics unit will also provide services for GM in Europe and Russia as part of the alliance, The Wall Street Journal reports. The two companies will continue to operate as separate firms, and compete with one another in a number of markets.

More from GlobalPost: Germany's war on solar

“This partnership brings tremendous opportunity for our two companies,” Dan Akerson, GM’s chairman and chief executive, said.

“The alliance synergies, in addition to our independent plans, position GM for long-term sustainable profitability in Europe.”

Both companies have been struggling in Europe. Earlier this month GM reported record profits for 2011, but massive losses of $700 million on the continent dragged its fourth-quarter earnings down. Cost-cutting measures are on the horizon for the firm’s operations there.

Peugeot’s sales in Europe plunged 8.8 percent last year, to 1.68 million vehicles, and the company is looking to sell shares to raise cash. Two weeks ago it announced plans to sell $2 billion in assets to try and cut debts of $4.5 billion.

More from GlobalPost: General Motors reports record profits for 2011

Sign up for our daily newsletter

Sign up for The Top of the World, delivered to your inbox every weekday morning.