In February, 2012, General Motors (GM, a.k.a. Government Motors) bought seven percent
of PSA Peugeot Citroën, both of which suffered huge losses last year.
The purchase was made ostensibly to gain manufacturing synergy. GM
became the second-largest shareholder in PSA Peugeot Citroën. Dan Akerson, GM CEO, said:
All of this from Akerson at a time when there is an over-capacity of auto manufacturing capability worldwide. Unused factory capacity costs auto manufacturers money to maintain and unproductive workers must be paid, so unused capacity is not good. "You can't keep that up for long. You'll go bankrupt," said Sergio Marchionne, the chief executive of Chrysler and Fiat. In fact, that is what happened to Chrysler and General Motors.
"There are tremendous opportunities and synergies to be realized in this alliance. We expect unmatched purchasing power on a global scale and capital expenditures on future product programs that are much less than each of us going it alone."The purchase is supposed to help unprofitable Adam Opel A.G., GM's wholly owned German subsidiary. GM and PSA Peugeot Citroën are looking to attain about $2 billion in cost savings annually within five years, which will come in part from joint development of new vehicles. Vauxhall in Great Britain, by the way, is the same as the Opel.
All of this from Akerson at a time when there is an over-capacity of auto manufacturing capability worldwide. Unused factory capacity costs auto manufacturers money to maintain and unproductive workers must be paid, so unused capacity is not good. "You can't keep that up for long. You'll go bankrupt," said Sergio Marchionne, the chief executive of Chrysler and Fiat. In fact, that is what happened to Chrysler and General Motors.
No comments:
Post a Comment