After having faced a series of losses in the European market, General Motors and PSA/Peugeot-Citroen are considering options to combine their European operations to come out of this situation. A joint venture now between the two parties would be the second phase as earlier General Motors had already injected 320 million Euros to earn a stake of 7 percent in PSA. But, the initial deal did not work really well for the company as value of the stake sloped down with the French automaker’s shares.
A second venture between the two is however considered useless by some of the industry experts as putting two troubled companies together to make a better one seldom works. Keeping that aside, the companies have had a discussion on minimizing losses in European market by combining their operations. One of the options in hand is the merging of the GM’s Opel/Vauxhall unit with PSA’s automotive operations. The new deal would lead to GM having a stake of 30 percent in the venture and it would have to pump in $10 billion.
The situation in Europe has forced the customers to keep themselves away from the dealers and showrooms. Thus, the automakers have to find new ways to woo the customers and perhaps, the only way seem to be reduction in prices. For lowering the prices, the companies will have to save on costs. In such a circumstance, the only way for survival and to reduce the losses is to share the burden with some other company and looks like the duo are trying to use this solution.
Source – Automotive News
