GM-PSA Alliance Cancels Large Car, Plans Three-Cylinder Engines

#GM, #Opel

The alliance between General Motors and PSA Peugeot Citroën will not yield a new midsize-to-large car. Automotive News reports that GM and PSA scrapped plans to co-develop a new model that would replace PSA's Citroën C5 and GM's Opel Insignia because they couldn't find a "convincing business case" for the car.

The news is not a huge surprise: the European market has always been shy of big cars, and the continent's current economic turmoil means it would be hard to sell European buyers on a large or midsize premium car. The model was one of the four cars that the two automakers said they would develop together in a bid to save costs. Yet AN says neither side could justify the expense of building that sort of car, given that sales would probably be minimal.

Nonetheless, GM and PSA reiterated plans for other areas of cooperation. First, the pair will develop a line of small and efficient three-cylinder gasoline engines based on an existing PSA design. They will go on sale by 2019. The new units will reportedly be based on the EB engine series already offered in 1.0- and 1.2-liter versions for the Peugeot 208.

In addition, the pair will co-develop three vehicle platforms. The first is a compact crossover for Peugeot and a compact MPV (a mini-minivan like the Mazda 5) for GM's Opel and Vauxhall. The next model is a subcompact MPV (potentially a tall B-segment hatchback) shared by both GM and PSA. And finally, the two companies will work on a subcompact "low-CO2" platform that will be used for future small, efficient GM and PSA vehicles in Europe and abroad.

The alliance says that the first of these new vehicles will launch by 2016, and that they will be highly differentiated between brands. In other words, there will still be meaningful differences between Opel, Vauxhall, Citroën, and Peugeot vehicles developed from a common framework or platform.

GM and PSA are also working on a deal for joint purchasing of materials and supplies in Europe, which could cut costs owing to bulk purchasing. And the two companies will explore vehicle production and sales in markets like Latin America.

The alliance between GM and PSA, announced in February, is supposed to save the two companies as much as $2 billion by 2017. Plans for a more serious alliance between Opel and Peugeot, however, have evaporated.

Sources: Automotive News, GM Europe

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