General Motors and PSA Peugeot Citroen announced Tuesday they would both build their next generation small people carriers in the same factory in Spain as part of the new strategic alliance between the US and French carmakers.
GM, which is trying to turn around its loss-making European unit Opel, took a 7 percent stake in the struggling French carmaker last year and they identified a number of joint projects to reduce costs.
Both will produce their small people carriers at a GM plant in Zaragoza, Spain, from late 2016. The facility already produces Opel's small people carrier, the Meriva.
In a joint statement the companies said Opel will lead the engineering of the project while PSA Peugeot Citroen will supply powertrains.
"The vehicles of both manufacturers will be highly differentiated and fully consistent with their respective brand characteristics," they said.
The two groups are also working on a joint replacement for Opel's larger people carrier, the Zafira, plus Peugeot's crossover 3008.
A third project aims to develop by 2017 new low-pollution models for the Opel, Peugeot and Citroen brands based on a platform from the French automaker.
Both PSA Peugeot Citroen and Opel are burdened by too much production capacity as European sales have slumped to near 20-year lows, and each are closing one factory.
The two have also launched a joint purchasing initiative and are working on developing small petrol motors together.
They hope joint projects can lead to $2 billion (1.5 billion euros) in savings per year by 2016.