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General Motors and PSA Peugeot Citroën inked a deal yesterday that will see the companies partnering to further their interests in Europe.
“This partnership brings tremendous opportunity for our two companies,” said Dan Akerson, GM chairman and CEO. “The alliance synergies, in addition to our independent plans, position GM for long-term sustainable profitability in Europe.”
The companies plan to share vehicle platforms, components and modules and to create a global purchasing joint venture that will improve both groups’ leverage in sourcing goods and services from suppliers by commanding $125 billion in purchasing power.
As part of the deal GM will acquire a seven percent stake in PSA Peugeot Citroën.
“This alliance is a tremendously exciting moment for both groups and this partnership is rich in its development potential. With the strong support of our historical shareholder and the arrival of a new and prestigious shareholder, the whole group is mobilized to reap the full benefit of this agreement,” Philippe Varin, chairman of the managing board of PSA Peugeot Citroën said.
The alliance will initially focus on small and midsize cars, MPVs and crossovers, the first of which is expected to launch in 2016.
At least that’s the findings from Evalueserve’s White Paper, entitled “Platform Strategy Will Shape the Future of OEMs.” Like many facets of the auto industry, the concept of platform sharing is nothing new, automakers have been doing it for decades.
Yet, the realities of doing business in the 21st century mean that not only is it no longer acceptable for automakers to offer a range of badge engineered models (think back to GM’s J-cars of the 1980s), it simply isn’t financially feasible to have a range of unique, dedicated platforms either.
According to Evalueserve’s own analysis, last year, the top 20 global passenger car platforms accounted for some 40 percent of global sales, with realistic projections set to see these top 20 account for almost 50 percent of all global vehicle sales by 2015.
Yet as we move forward and automakers seek to maintain economies of scale, the number of vehicle architectures is expected to shrink still further, even as many brands aim to proliferate their model offerings as well as adding localized production, all in an effort to make their products appeal to a wider range of consumers in different global markets, while minimizing supply and tariff issues.
Evalueserve estimates that by 2020, the major vehicle manufacturers; Daimler AG, Fiat/Chrysler, Ford, General Motors, Honda, PSA Peugeot/Citroen, Renault/Nissan, Toyota and Volkswagen Group will have reduced the total number of vehicle architectures they use by a third.
In fact, not too long ago, GM declared that by 2018, it will have reduced its number of global vehicle architectures to just 14, down from 30 in 2010. The company also said this strategy should help it save some $1 billion each year, money that’s primarily contributed by product development programs.