Peugeot/Citroen Consider Production Jaunt In Brazil With GM
24h MAY 2012

PSA/Peugeot-Citroen and partner General Motors are in discussions to build a joint plant in Brazil, The two carmakers will make a decision before the end of the month on whether to invest 1 billion euros in the project.

The plant could be built in either Minas Gerais or Rio de Janeiro, in February, PSA and GM agreed to establish a partnership to share vehicle platforms and jointly purchase parts and materials. The companies hope to boost the size and the scope of their product lineups, save billions on purchasing and revive their struggling European operations as a result of their alliance.

GM is expected to benefit from PSA's help with hybrid technology and the development of smaller models, while the French automaker is seen capitalizing on GM's expertise in SUVs as the companies seek to revive their fortunes in Europe. Both will likely collaborate on diesel engines.

Both automakers have seen losses at their European operations mount as customer demand falls amid ongoing economic problems in the region.

PSA's automotive business lost 497 million euros in the second half of last year. As a result, PSA wants to cut 6,800 jobs and trim costs by 1 billion euros this year. Troubles at Opel/Vauxhall caused GM's European business to abandon plans to reach break-even in 2011. GM Europe, which includes Opel/Vauxhall and Chevrolet, ended 2011 with a $747 million operating loss.

Last month, GM CEO Dan Akerson told the Automotive News China Conference in Beijing that PSA was a key player in the U.S. carmaker's expansion plans and added that the new partners would "look at everything from Asia to Latin America."