General Motors' Opel factory in Zaragoza, Spain, will build future subcompact minivans for Opel and PSA/Peugeot-Citroen, Opel said today.
The minivans will be based on a PSA platform, Opel said in a statement.
Opel's engineering team in Ruesselsheim, Germany, will lead engineering for the joint project. PSA will supply powertrains. The first vehicles will come to market in late 2016, the statement said.
Opel did not give any details about which specific models will be produced in Spain, but media reports last week said Zaragoza will build the next Citroen C3 Picasso minivan. The plant currently builds the Opel Meriva small minivan and Corsa subcompact and will add the Mokka small SUV next year.
PSA's factory in Trnava, Slovakia, currently builds the C3 Picasso.
GM and PSA set up a partnership last year to help the two companies return to profit in Europe, where car sales are heading for their sixth straight annual decline.
Media reports have speculated that PSA may gain production of an Opel model. The Opel Zafira compact minivan, which is due to launch in 2017, could be built in PSA's Sochaux plant in France, reports said. The current Zafira is built at Opel's Bochum factory in Germany, which is being closed.
"The alliance between GM and PSA is based on a fair balance," Opel said in the statement, adding further that announcements regarding joint projects would follow at a later date.
GM and PSA are aiming for savings of $2 billion with their alliance, which involved GM taking a 7 percent stake in PSA. The companies have since aligned purchasing and logistics and are working to develop new models together. Today's agreement represents the first joint production between the carmakers.
The two automakers are both struggling to fill underutilized facilities in Europe. PSA is reducing its French workforce by 17 percent and closing its Aulnay plant near Paris.
Bloomberg and Reuters contributed to this report