GM, PSA halt talks on deeper tie-up, report says

[DOCTOR]

(Reuters) - General Motors Co. and alliance partner PSA/Peugeot-Citroen have halted talks on a deeper tie-up amid misgivings about the French carmaker's worsening finances and government-backed bailout, people familiar with the matter told Reuters.

The companies, already pursuing an operational partnership announced in February, had also been exploring a full combination of PSA with GM's European unit Opel, which is based in Germany.

But two sources with direct knowledge of those discussions said they were broken off after PSA accepted a state guarantee for its lending arm last month and announced a further deterioration of its cash position.

The automakers have agreed to a "pause" in early-stage talks on a Peugeot-Opel deal, said one of the sources. The government bailout is "sabotaging the plan," he added.

"They now consider that any deeper tie-up is unlikely before 2014, when the market picks up," another source said.

"The government bailout conditions rule out French job cuts, which means a deal can't happen any faster," he said. "It would be politically impossible to have all the cuts falling on the German side."

A PSA spokesman said there were no Opel tie-up talks currently in progress, breaking a month of silence since they were first reported.

"There are no such discussions underway," the spokesman said, declining to comment on past conversations. GM had no comment, a company spokesman said.

Read more: http://www.autonews.com/article/2012...#ixzz2C8R8Dscc

[DOCTOR]

This should lay to rest the rumours about a full blown merger which was never realistically going to happen anyway

[Rocket 88]

I can't imagine how tying up with PSA Peugeot/Citroen would be good for GM as a whole, and not horrible for Opel in particular. Certainly there are folks who know alot more about he European market than I do, but it just seems unlikely to be beneficial.

[DOCTOR]

I can't imagine how tying up with PSA Peugeot/Citroen would be good for GM as a whole, and not horrible for Opel in particular. Certainly there are folks who know alot more about he European market than I do, but it just seems unlikely to be beneficial.

Spot on, you don't need to be an expert on Europe to see the downside to what was being suggested. Even as is then it is likely to be years before there are any real financial benefits, what is needed is savings now. The difference between Ford and GM in Europe is so different from the US, Ford have looked at the problem - decided what needs doing - and then done it. No ifs, no buts, no lets have a chat about it, no lets have a little merger, they just did it. Opel are just as likely to be still talking about what they are going to do in a years time. Very sad.

[akbar]

The difference between Ford and GM in Europe is so different from the US, Ford have looked at the problem - decided what needs doing - and then done it. No ifs, no buts, no lets have a chat about it, no lets have a little merger, they just did it. Opel are just as likely to be still talking about what they are going to do in a years time. Very sad.

To my knowledge, Ford has not done anything yet - they have only announced what they are going to do. Executing it is a different matter, with the labor unions in play.

[vanshmack]

I love how the market is always going recover "the year after next". This article says 2014, and every story written about industry challenges in the last 5 years has done the same. Meanwhile, the industry continues to show only marginal improvement.

[mchicha]

Opel would be best served by working more closely with its American sister Buick to make its factories profitable, by building more upscale models for US and China, importing US Buick products like Enclave and exporting versions of its Convertibles and hatches to shore up US and Chinese Buick line ups.

Like Adam and corsa are such no brainers for Buick… Just have em fully loaded and upscale.

[62Lincoln]

To my knowledge, Ford has not done anything yet - they have only announced what they are going to do. Executing it is a different matter, with the labor unions in play.

Baloney.

[GMJoe]

Opel would be best served by working more closely with its American sister Buick to make its factories profitable, by building more upscale models for US and China, importing US Buick products like Enclave and exporting versions of its Convertibles and hatches to shore up US and Chinese Buick line ups.

Like Adam and corsa are such no brainers for Buick… Just have em fully loaded and upscale.

This seems the right way to go. Opel has some appealing products that would sell well in the US and China as Buicks. Play to your strongest markets.

[AdmiralViscen]

Can GM come up with a strategy that survives six months?

[kevinahcc20]

Good...these "Alliance Parterships" (Subaru, Suzuki, FIAT, et al) were a complete waste of time and diversion of resources. GM always did the heavy lifting and the "Partner" got the benefits. You either buy and integrate a car company or you leave them to survive or not on their own. These halfway deals are nothing but a distraction for GM from its core business.

[PHAT-JAY]

GOOD, gm should have got in BED with BMW instead of them anyway....

[BigAls87Z28]

I don't understand why GM even bothers, or any other company bothers to work with GM. Internally, GM works in a totally different way than just about every auto maker.

[CBJ]

Spot on, you don't need to be an expert on Europe to see the downside to what was being suggested. Even as is then it is likely to be years before there are any real financial benefits, what is needed is savings now. The difference between Ford and GM in Europe is so different from the US, Ford have looked at the problem - decided what needs doing - and then done it. No ifs, no buts, no lets have a chat about it, no lets have a little merger, they just did it. Opel are just as likely to be still talking about what they are going to do in a years time. Very sad.

Actually, being at least familiar with Europe would help. If you look at were Ford has it's production bases compared to those for GM you'd see that Ford is closing plants in places where job markets are more flexible. Which is to say they aren't in Germany or France. Ford can do it because they don't have to deal with the unions and the states to get it done. Luck more then anything really.

[Rick_VT]

I can't imagine how tying up with PSA Peugeot/Citroen would be good for GM as a whole, and not horrible for Opel in particular. Certainly there are folks who know alot more about he European market than I do, but it just seems unlikely to be beneficial.

Maybe they thought a tie up with PSA might put pressure on the Opel unions and get them to back down a little n their hard line stance.