Peugeot and GM discuss production deal: sources

DETROIT – General Motors and PSA Peugeot Citroen are discussing a broad manufacturing alliance designed to stem losses in Europe and lower production costs elsewhere, sources with knowledge of the matter said.

Talks between GM, the world’s biggest automaker, and European No.2 Peugeot are focused on sharing vehicles and parts rather than a capital tie-up, according to the people. Any new shareholdings that emerged would be small and symbolic.

Peugeot earlier acknowledged that alliance talks were taking place with an unnamed partner, sending its shares soaring after online newspaper La Tribune reported that discussions with GM had been underway for months.

“There can be no certainty at this stage that these discussions will result in any agreement,” the Paris-based company said, without elaborating.

“We routinely talk to others in the industry but have no comment beyond that,” GM spokeswoman Kelly Cusinato said.

While potential synergies have been identified, Peugeot is treading cautiously to avoid building expectations, mindful of the 2010 failure of advanced tie-up talks with Mitsubishi Motors.

Like Peugeot, GM’s European Opel division faces heavy restructuring to reverse losses compounded by the region’s slumping auto market and cut-throat price competition.

Peugeot on Feb. 15 announced new cost cuts and put its Gefco logistics business up for sale to help finance the overseas expansion it badly needs to reduce exposure to stagnating home markets.

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