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Europe is clearly top priority for the new alliance brewing between General Motors and PSA Peugeot Citroen which is expected to be made public soon. On the face of it, there is no way this will have any impact on the French automaker's India project which has been put on hold.
GM is tipped to take a five per cent stake in PSA as part of a strategic plan to ensure the well-being of its German unit, Opel. These are not the best of times in Europe where both PSA and Opel had a difficult 2011 with the outlook for this year projected to be equally grim.
However, it is still not entirely clear if the imminent GM-PSA marriage will be confined to Europe or eventually extended to faster growing markets like China and Brazil. GM already has a strong alliance with SAIC Motor Corp in China where the duo is preparing its India blueprint and will also look at ASEAN in the not-so-distant future.
PSA, likewise, is betting big on its China business where it has joint ventures with Dongfeng and Changan. It is difficult to figure out how the new GM alliance will fit into the China agenda unless it has more to do with synergies in manufacturing. Likewise, Latin America, especially Brazil, could see some joint work happening between PSA and GM.
Significant partnership
India is not likely to figure in the scheme of things, at least for now, unless PSA works out a new business plan. A lot will depend on its financial turnaround in 2012 where Europe will play a key role in the revival process. PSA has already made known that it is targeting 50 per cent of its sales to come from beyond Europe by 2015, going up to over 65 per cent by 2020.
From GM's point of view, this partnership is significant considering that it was virtually down in the dumps four years ago. However, its China business has been growing thanks largely to the SAIC alliance. GM, however, is not new to global partnerships given its history with Suzuki, Isuzu and Fiat. Its acquisition of Daewoo at the turn of this century also helped revive its operations in Europe and Asia. PSA will be an interesting ally for GM especially when the global automobile industry is going through rapid consolidation.
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