GM takes stake in France's Peugeot as part of European alliance The deal will generate $2bn (£1.3bn) in annual savings within five years, the two companies said. Separately, Peugeot said it would raise €1bn euros (£830m) in a rights offering. The agreement "positions GM for long-term sustainable profitability in Europe," said Dan Akerson, the chairman and chief executive of GM, whose European operations include plants in Luton and Ellesmere Port. Europe is proving a headache for the car industry even as markets in the US and Asia show signs of recovery. Car registrations in Europe fell 6.6pc to 1.1m in January, the steepest decline since June, according to the European Automobile Manufacturers' Association. Although both companies insisted the savings will come from their increased purchasing power, analysts said the alliance will inevitably see job cuts. GM and Peugeot also said that the alliance does not remove the need for both companies to separately restructure their European operations. "The alliance doesn't replace what we have to do to sort out the overcapacity question," said Philippe Varin, Peugeot chief executive. Peugeot will use 62pc of its European capacity this year, while GM will use 74pc, according to LMA Automotive, a UK research firm.