U.S. automaker General Motors Co. (GM) agreed Monday to transfer the majority of its logistics business in Europe to Gefco, a wholly-owned logistics unit of French automaker PSA Peugeot Citroen. The deal will take effect in 2013.
The long-term, exclusive logistics deal will help GM to enhance its operational efficiency and save on costs, while allowing it to focus its internal resources more on the core automotive business. Gefco is an established leader in automotive and industrial logistics in Europe and beyond.
The logistics deal is the first collaboration since the two automakers formed a global strategic alliance in late February. It is also currently slated to be one of the largest logistics agreements in the European automotive industry.
"This marks the first step in realizing benefits from the larger Alliance with PSA. This logistics agreement will bring operational efficiency and costs savings to GM and allow us to fully utilize the proven expertise of Gefco,"GM Vice Chairman Steve Girsky said in a statement.
The logistics deal will see GM transfer the Opel/Vauxhall, Chevrolet and Cadillac Europe logistics activities to Gefco. This will also include GM's activities in Russia as well as services such as material and component deliveries to manufacturing plants, delivery of finished vehicles to dealerships and the transport of after sales spare parts to our distribution centers.
"This agreement is the first step in our long term strategic Alliance with GM. It enables Gefco to continue its strategy of broadening its existing client base and growing its global business operations," Peugeot Chairman Philippe Varin noted.
Both Peugeot and GM's Opel unit are struggling with slow sales and overcapacity in Europe. Both the automakers are trying hard to reverse mounting European losses.
The broad-scale global strategic alliance was formed in February to leverage the combined strengths and capabilities of the two companies, contribute to their profitability and strongly improve their competitiveness in Europe.
The companies estimate total synergies of about $2 billion annually from the alliance within about five years. The synergies will be derived from combined purchasing, logistics and the combined development and production of vehicles and parts.
As part of the formation of the alliance, GM also picked up a seven percent stake in Paris-based Peugeot CitroÃ«n for a total amount of 304 million euros, and became its second largest shareholder. GM bought the stake when Peugeot raised capital of 1 billion euro or $1.3 billion, with a preferential subscription rights offering to existing shareholders.
In Monday's regular trading session, GM is currently trading at $19.50, down $0.22 or 1.12% on a volume of 1.48 million shares. Peugeot shares are trading in Paris at 7.47 euros, down 0.28 euros or 3.61% on a volume of 6.04 million shares.
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Article by Lora Cecere from Supply Chain Shaman; published on May 23rd 2013