Peugeot-Opel deal promises Big Bang in small cars: sources

Thu Feb 23, 2017 10:40am EST
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By Laurence Frost and Gilles Guillaume

PARIS (Reuters) - French carmaker PSA Group (PEUP.PA: Quote) is planning an engineering blitz to redevelop Opel's core models with its own technology if it succeeds in buying General Motors' (GM.N: Quote) European arm, company sources and advisers told Reuters.

The Peugeot maker, which is in talks with GM on an Opel deal, wants to build the next Corsa mini on the same architecture as its Peugeot 208 and Citroen C3 models, several sources said.

This presents a tough challenge as the new GM model is due for an update in two years, leaving little time for a major reworking of its design. PSA's alternative, however, would be to wait until around 2025 - the end of its next model cycle - to tap cost savings in the best-selling vehicle category.

Chief Executive Carlos Tavares outlined the plan at a PSA board meeting on Wednesday, one source said. The aim would be to fuse the small car categories that PSA and GM failed to combine under a looser 2012 alliance that missed key targets.

Tavares refused on Thursday to comment on the details of possible PSA-Opel vehicle programs as he presented record PSA earnings to reporters and analysts, stressing that the acquisition had yet to be agreed with GM.

But he said the combined company would aim to sell more than 5 million vehicles annually within "a few years", confirming an earlier Reuters report. PSA and GM Europe delivered 4.3 million vehicles between them last year.

"When you look at the product plan you see that you can, in a quite speedy way, implement significant synergies," Tavares said.

The next Corsa and related Mokka X mini-SUV are among a wave of small Opel cars already in development for launch in 2019. The two models represent 40 percent of GM's European sales, according to LMC Automotive data.   Continued...

Carlos Tavares, Chairman of the Managing Board of French carmaker PSA Peugeot Citroen, arrives to attend a news conference to present the company's 2016 annual results at Peugeot headquarters in Paris, France, February 23, 2017. REUTERS/Gonzalo Fuentes