Peugeot Shifts Citroen Minivan Production to GM Factory

PSA Peugeot Citroen (UG) will shift production of a compact minivan to a General Motors Co. (GM) factory in Spain as the two carmakers seek to deepen cooperation to stem losses in Europe.

GM’s Opel division will build a new generation of a jointly developed small multi-purpose vehicle at its Zaragoza factory, starting in late 2016, the companies said in a joint statement today. Peugeot, which currently builds the Citroen C3 Picasso small van in Trnava, Slovakia, will supply the engines and transmissions for the vehicles.

“The alliance between PSA and GM is based on a balanced approach,” the companies said in the statement.

GM and Paris-based Peugeot set up a partnership 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 alliance, 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. Today’s agreement represents the first joint production between the carmakers.

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

Peugeot and Detroit-based GM are also in early discussions to make the next generation of Opel’s larger Zafira minivan at the French carmaker’s plant in Sochaux in its home country, two people familiar with the matter said last week. Zafira production is slated to move from the Bochum plant to Ruesselsheim, Germany, where Opel is headquartered, in 2015.

To contact the reporter on this story: 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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