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Opel plans Peugeot-based cars, plant decisions loom

The logos of German General Motors daughter Opel and French car maker Peugeot are seen at a Opel and Peugeot dealership in Leverkusen near C
The logos of German General Motors daughter Opel and French car maker Peugeot are seen at a Opel and Peugeot dealership in Leverkusen near C

By Laurence Frost and Gilles Guillaume

BRUSSELS (Reuters) - General Motors and PSA Peugeot Citroen outlined plans to collaborate on a new range of small cars and minivans based on the French company's technology in order to spread development costs across more brands and models.

But tough decisions on where to build different models are still to come for the joint car programs, GM Vice-Chairman Steve Girsky and Peugeot Chief Executive Philippe Varin acknowledged at a news conference in Brussels on Thursday.

To balance a deal in which Peugeot architectures underpin future versions of GM's Opel Corsa, Meriva and Zafira models, the U.S. automaker's engineering centre in Ruesselsheim, Germany, will develop successors to the Peugeot 2008 and Citroen C3 Picasso minivans, Varin and Girsky announced.

"From what I see today there is no negative impact of the alliance on resources on either side," the Peugeot CEO said, when asked about possible job losses.

That may change when it comes to assembling the jointly developed vehicles, due in showrooms from 2016 onwards for sale largely in European markets.

Peugeot and GM's Opel division are both struggling with excess production capacity and mounting losses compounded by a protracted sales slump in Europe - where auto demand is at a 17-year low and still falling.

"These products are coming to market in 2016 so it's premature to make any manufacturing decisions," Girsky said.

"We'll deal with that when the time comes, somewhere down the line."

STAYING AFLOAT

Peugeot, which is cutting some 10,000 jobs and closing a domestic plant, has already required a capital increase, a 7 billion euro government loan guarantee and 1.5 billion euros ($2 billion) in asset sales over the past year to stay afloat.

Among Peugeot's cuts, research and development accounts for a significant part of the voluntary departures the company is seeking from its non-production workforce.

The company said in July its alliance with GM would trim 350 million euros from production costs by 2015, in addition to 500 million euros in cuts from industrial tooling and R&D.

Detroit-based GM, which took a 7 percent Peugeot stake in the French carmaker's March share issue, also plans to close a plant in Bochum, Germany, to stem European losses expected between $1.5 billion and $1.8 billion for 2012.

Varin and Girsky declined to give more details of planned alliance models, production or launch dates.

Future small cars like the Opel Corsa and Peugeot equivalents - the 208 and Citroen C3 - will be based on an architecture jointly developed from the French carmaker's existing technology.

Architectures are the underlying structures and sets of components on which whole range of vehicles can be based.

Future replacements for the Opel Zafira and Peugeot 3008 minivans will share the "EMP2" platform about to go into production in the form of Citroen's C4 Picasso people-mover.

The alliance chose Peugeot underpinnings for the new cars because they were better suited to the European market, both executives said.

In the Opel Zafira category, GM's Girsky added, "we didn't have enough volume to justify doing it on our own."

The carmakers also reiterated their alliance cost savings target of $2 billion annually by 2016 - also helped by combined logistics and a new joint purchasing organisation to begin operating this year.

(Additional reporting by Ben Klayman in Detroit; editing by Blaise Robinson and Giles Elgood)

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