GM To Sell Opel To Peugeot For $ 2.33 Billion

Violet Powell
March 6, 2017

PSA Group, the parent company of Peugeot, Citroen and DS Automobiles vehicle brands has bought Opel and Vauxhall auto brands from General Motors for a deal worth € 1.3 billion.

On Monday both companies said that the deal was expected to generate annual savings of €1.7bn by 2026, with Opel generating an operating profit margin of 2 per cent by 2020 and 6 per cent by 2026.

With the addition of Opel/Vauxhall, which generated revenue of €17.7-billion in 2016, PSA will become the second-largest automotive company in Europe, with a 17% market share. Opel has failed to turn a profit since 1999, losing on average about $1 billion a year since then. Taking major brands targeting the European market, where it has had a presence for 90 years, off its map marks another ego blow to a company that for decades was the world's largest automaker.

Clark says he and Prime Minister Theresa May have been in contact with PSA Group and GM and that "they have been clear this deal is an opportunity to grow the Vauxhall brand, building on their existing strengths and commitments".

The companies did not comment on jobs in their statements, but said they expect the combination of Opel and Vauxhall with Peugeot and Citroen to enable cost savings in manufacturing, purchasing and research and development.

If that's how it's going to play out, PSA will nearly certainly reduce its 35,000-strong headcount in continental Europe, where Opel has multiple factories in Germany, Spain, France, Hungary, Poland and Austria.

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Beyond those horizons, however, the outlook for Opel plants may be less certain. "They will be competing for workload".

"The uncertainty caused by Brexit is harming the United Kingdom auto sector", said Len McCluskey, leader of British labor union Unite. Now, that means that the current model at [the United Kingdom plants] Ellesmere Port and Luton will continue. The model had not previously been scheduled to make its debut there.

Staff at PSA's smaller Villaverde factory in Madrid, where production is running at well below capacity, are especially anxious, they added.

PSA's boss dismissed worries about a "hard" Brexit which would mean the United Kingdom losing its current trade advantages.

It is feared that the deal will lead to significant job losses in the medium term at Opel, which has 38,000 employees in seven European countries.

But he did concede: "This may look to you a little bit romantic". This is a restructuring of the organisation.

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