GM Said to Consider Production With Peugeot in Alliance

General Motors Co. (GM) and PSA Peugeot Citroen (UG) are looking at deepening their alliance with joint production at one another’s factories, two people familiar with the matter said.

GM’s Opel division may build the Citroen C3 Picasso at a factory in Zaragoza, Spain, said the people, who asked not to be identified because there’s no final decision. The two are also in early discussions to make the next generation of Opel’s Zafira van at Peugeot’s plant in Sochaux, France, the people said. The automakers declined to comment.

GM and Peugeot set up an alliance last year to help the two companies return to profit in Europe, where car sales are heading for their sixth straight annual decline. The two are aiming for savings of $2 billion with the partnership, which involved GM taking a 7 percent stake in Peugeot. The companies have since aligned purchasing and logistics and are working to develop new models together.

The automakers are both struggling to fill underutilized facilities. Opel has laid out plans to shut a factory in Bochum, Germany, by the end of next year, while Peugeot is reducing its French workforce by 17 percent and closing a plant on the outskirts of Paris.

The C3 Picasso is currently built in Trnava, Slovakia, while the Zafira van’s production will move from Bochum to Ruesselsheim, where Opel is headquartered, in 2015.

French newspaper Les Echos first reported the talks earlier this week.

To contact the reporters on this story: Dorothee Tschampa in Frankfurt at dtschampa@bloomberg.net; Mathieu Rosemain in Paris at mrosemain@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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