GM-PSA Abandons Joint Small-Car Project

PSA Peugeot Citroen and General Motors Co. are scrapping plans to co-develop a platform for small cars and may scale back other aspects of the alliance they signed last December.

PSA tells reporters that "the business model just wasn't there" for the B segment platform. The company's third-quarter financial announcement earlier today says the project and "relevant terms of the development agreement" are under review.

One result, the company adds, is that the eventual $1 billion (€727 million) in cost savings it expected from the GM alliance "may be readjusted downwards." But it also says unspecified new initiatives could be launched.

The decision does not affect the alliance's first joint project: production of PSA-based B segment MPVs at GM's factory in Zaragoza, Spain, in 2016. PSA and GM also continue to co-develop C segment MPVs and crossovers.