Peugeot and Citroen’s parent company PSA Group has agreed a £1.9 billion deal (€2.2 billion) to buy the Vauxhall and Opel brands in Europe from General Motors. All of the details of this agreement are expected to be completed by the end of the year.
If the deal is completed as expected, PSA Group will become officially the second largest automotive conglomerate in Europe behind Volkswagen AG, with a 16 per cent stronghold on the European market.
In recent years, GM sought to boost its co-operation with Peugeot and Citroen, to cut manufacturing costs and improve the profitability of both Opel and Vauxhall. GM’s Europe division hasn’t made a profit since 1999 and has had troubles particularly in Britain.
Although Vauxhall has sold some of the most popular-selling new cars in Britain on a regular basis under GM control – those cars including the Corsa and Astra – GM has ended up dropping brands like Chevrolet and Chrysler from the UK in recent years. GM Europe have also reportedly been concerned about increased UK production costs post-Brexit.
Reaction to the deal
The chairman of the managing board of PSA Group, Carlos Tavares, said: “We intend to manage PSA and Opel/Vauxhall capitalizing on their respective brand identities.
“Having already created together winning products for the European market, we know that Opel/Vauxhall is the right partner. We see this as a natural extension of our relationship and are eager to take it to the next level.”
GM’s chairman and chief executive Mary Barra said: “We believe this new chapter puts Opel and Vauxhall in an even stronger position for the long term and we look forward to our participation in the future success and strong value-creation potential of PSA through our economic interest and continued collaboration on current and exciting new projects”.
Barra also said that GM’s European division would have broken even in 2016 had it not been for the UK’s decision to leave the European Union.
What about the future of Vauxhall UK plants?
PSA Group and the Vauxhall and Opel brands have 24 production facilities combined across Europe, so it is widely expected that PSA will close some of those factories down to make savings once their takeover is sorted. That puts the future of the UK-based Vauxhall plants in Ellesmere Port and Luton, which hire around 4,500 people, into doubt.
The PSA Group met UK government and unions last week to provide assurances that existing production commitments would be honoured at Ellesmere Port and Luton. Currently, Vauxhall’s Ellesmere Port plant is committed to building the current Astra until 2021 and the brand’s Luton plant is meant to be building the Vivaro van until 2024.
While the two plants are probably safe until these respective dates, the security of these factories and the jobs at each remain uncertain for now.
