Ford and PSA Peugeot Citroen Finalize Engine Cooperation Deal

Strategic Insights -

Ford, the world's second largest carmaker, is set to unveil a far-reaching engine cooperation deal with PSA Peugeot Citroen, the French car and van manufacturer. The agreement, which will be announced in Paris later this week, will involve a global partnership on engines, with manufacturing and production of new products split between the two companies. This move is seen as a strategic step for Peugeot to remain independent in the globalizing automotive industry. The partnership is also expected to benefit Ford, as it will allow the company to tap into Peugeot's expertise in diesel engines and its large volume exposure to the European market.

Key Takeaways:

  • The engine cooperation deal between Ford and PSA Peugeot Citroen is a global agreement, covering manufacturing and production of new products.
  • The partnership will focus on engines, with joint production and sharing of technology for the next generation of diesel engines.
  • Ford and Peugeot have already collaborated on a small direct-injection diesel engine, due to be available from 2001, and are expected to share engine development for cars built in Brazil.
  • Peugeot is expected to sell 750,000 diesel cars in western Europe this year, compared to less than 300,000 by Ford.
  • Peugeot has made significant strides in reducing diesel engine emissions, with a higher market penetration than Ford in western Europe.
  • Diesel cars are expected to achieve a 26% market share in western Europe this year, up from 24% in 1998.
  • Ford's chief executive, Jacques Nasser, has signaled that the two companies could consider other areas of cooperation where they are not in direct competition.
  • The partnership is a key part of Peugeot's strategy to remain independent in the globalizing automotive industry.

Statistics:

  • 750,000: the number of diesel cars Peugeot-Citroen is expected to sell in western Europe this year
  • 300,000: the number of diesel cars Ford is expected to sell in western Europe this year
  • 26%: the expected market share of diesel cars in western Europe this year
  • 24%: the market share of diesel cars in western Europe in 1998
  • 2001: the year in which the small direct-injection diesel engine developed by Ford and Peugeot is expected to be available

Sources:

  • Interview with Jean-Martin Folz, head of PSA Peugeot Citroen, The Financial Times, 1999.
  • "PSA aims to share development costs", The Financial Times, 1999.
  • Statement by a Ford official, name withheld, The Financial Times, 1999.
  • Interview with John Lawson, head of automotive research at Salomon Smith Barney, The Financial Times, 1999.