Mark Phelan: General Motors will gain from limiting deal with Peugeot
General Motors’ far-reaching deal to develop vehicles with French automaker PSA Peugeot Citroen appears to be growing less ambitious by the day. That’s almost certainly good news for GM Europe, which is more than capable of developing world-class cars on its own.
The 18-month-old agreement initially looked like one of new GM’s few retreats into the mind-set that got the old pre-bankruptcy company in trouble: a belief that it could cure fundamental problems by hiring other automakers to make its vehicles better.
There’s no substitute for being good at what you do for a living. GM seemed to forget that for much of the 1980s and ’90s it entered one ill-advised alliance after another with Honda, Suzuki, Fiat and Subaru, rather than strengthen its own capabilities.
GM spent billions and got little of lasting value from the deals. Worse than the wasted money, it squandered precious time that never produced anything, while its competitors forged ahead developing new vehicles and technologies.
The prospect of GM and PSA forming a committee-laden alliance to develop vehicles reeked of the old GM like last winter’s coat smells like the storage closet.
What’s the point of being one of the world’s three largest automakers if you don’t use that scale to develop vehicles globally? The deal could simultaneously reduce GM Europe’s ability to engineer vehicles and aid a competitor.
Opel has had a world of problems, losing a reported $18 billion since 1998, but nobody has ever questioned its ability to engineer terrific cars.
In Opel’s two decades of troubles, nobody ever said, “Gee, if only your cars were a bit more French.”
Opel deserves to be GM’s center of expertise for compact and midsize cars, small gasoline and diesel engines. Cars like the Opel Astra and Insignia, Buick Regal and Verano, Chevrolet Cruze and Impala prove that.
So it’s good news GM appears to have eighty-sixed joint development of subcompact, compact and midsize cars: That’s a core competency. No automaker should outsource developing those cars.
GM and PSA do plan to share engineering and production of compact and subcompact minivans. That makes sense. Europe’s minivan market has stalled. A few customers want small minivans like the Opel Zafira and Meriva, but not enough to justify GM and PSA each developing new ones.
Don’t believe reports the companies will collaborate on small crossovers, though. European demand for little SUVs is soaring, and GM is very good at crossovers. It’s likely to keep future models like the Opel Mokka and Buick Encore in-house, though the minivans may borrow some crossover styling elements.
A couple other aspects of the deal are going forward. GM and PSA are sharing logistical services — shipping and material handling — and hope to combine some purchasing. Those projects should save Opel money without reducing its capability.
GM’s 7 percent stake in PSA initially cost about $424 million. It’s a lot of money, and somebody spent it unwisely.
The good news, however, is that today’s GM seems disinclined to throw good money after bad. The PSA deal is not likely to consume any more resources. Opel can do what it does best: developing world-class small and midsize cars.
ABOUT THE WRITER
Mark Phelan is the Detroit Free Press auto critic. He can be reached at firstname.lastname@example.org.
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