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PSA Peugeot Citroen alliance with General Motors is already delivering savings

PSA Peugeot-Citroen's alliance with General Motors, announced in February last year, is moving forward at a pace "no other alliance has moved at," with joint purchasing already up and running and delivering savings.

"Both sides were very clear from Day One that the focus would be on a turnaround in Europe for both companies with shared platforms for three models and joint purchasing," said Jon Goodman, PSA executive vice-president communications.

The first models off joint platforms are due in 2016-17 and the two sides are also investigating sharing small petrol engines, he said.

Last week PSA announced that it will build a new family of diesel engines in France largely because of agreement with the unions over flexibility who have responded well to negotiations. "We've been sharing the nitty-gritty of our strategy with the unions which is something we haven't done enough of in the past," said Goodman. The company hopes to reach an agreement on a new social contract by the end of October.

"Negotiations are very constructive and there's an understanding by the unions that we need to do something," he said, adding that labour costs in France are €35 an hour against €22 in Spain.

The success of the Peugeot 2008 launched this summer has led to a second shift being added at the Mulhouse factory in eastern France meaning the PSA is adding workers even as it closes the Aulnay plant near Paris.

"Last year was a very tough year but everything we said we would do this year we have done," said Goodman. "Our factories in Europe will be at 100% capacity on two shifts by 2015-16."

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