DETROIT - General Motors Co. has decided to unload its 7 per cent stake in French automaker PSA Peugeot Citroen.
The Detroit company said Thursday that it is selling all 24.8 million shares of PSA to institutional investors. No purchase price was disclosed, but it appears GM will lose about $39 million on the deal.
GM bought the PSA stake in March 2012 for $402 million when the companies announced a car-building and purchasing alliance. But at Thursday's closing PSA price of 10.625 euros, the stake would be worth 263.9 euros, or $362.6 million.
GM said in a statement that the alliance will continue and will focus on jointly developing vehicles, joint manufacturing, purchasing and logistics.
"Our equity stake was planned to support PSA in their efforts to raise capital at the time of the creation of the GM and PSA alliance, and that support is no longer needed," GM Vice Chairman Steve Girsky said in a statement.
Both companies said in statements that the alliance continues to progress, but both sides also said they were looking for new opportunities.
GM and PSA said they will keep co-operating to build two vehicles based on PSA underpinnings, a subcompact multi-purpose vehicle and a compact crossover SUV. They also will co-operate on a new generation compact commercial vehicle. The statement said the first vehicles from the alliance are expected to hit the market in 2016.
Each company also will produce a vehicle for the other, the PSA statement said. Compact multipurpose vehicles will be built at the GM Espana plant in Zaragoza, while the compact crossover SUV will be built at a PSA plant in Sochaux, France.
PSA's statement also said it is reviewing potential industrial and commercial projects and a potential capital increase with partners including China's Dongfeng Motors.
Initially the companies expected the alliance to save them $2 billion a year annually in five years, with the benefits split roughly equally. But Thursday's PSA statement estimated the annual savings at about $1.2 billion per year.
Both of the companies are struggling in Europe's fiercely competitive, oversupplied car market. Earlier this year PSA announced plans to shut factories and shed up to 8,000 jobs.