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PSA buys GM's European operations

GM all-but exits Europe as it sells its Opel and Vauxhall brands.

Opel Propulsion plant

The €210m Opel Global Propulsion Systems Plant opened recently in Germany Image: Opel

The deal will cost PSA - the owners of Peugeot and Citroen car brands - €1.8bn ($1.9bn), with GM also having to pick up some $4-4.5bn worth pension and other business-related charges.

In return, GM will hand over it's loss-making Opel operations, as well as the UK Vauxhall brand, making PSA the second largest auto-maker in Europe.

The consolidation is estimated to deliver savings in the region of €1.7bn by 2026 but, more importantly, will provide PSA with significant scale in a highly competitive marketplace.  It will also bring additional expertise in electric and fuel-cell technologies.

According to reports, GM's Opel brand had lost a total of €9bn since 2009.  However, PSA is confident that incorporating the GM brands with its own marques will provide a profitable turnaround in the longer-term; PSA itself having been subject to a French Government and Chinese investment bail-out in 2014.

With Britain voting to leave the EU (Brexit), there is considerable concern that PSA will shut down the UK-based Vauxhall operations in Luton and Ellesmere Port near Liverpool.  However, PSA Chief Executive Carlos Tavares re-stated earlier commitments made with GM that both plants would be safe until at least 2020.

The US manufacturer will retain a presence in Europe with small volume Chevrolet sales.

Tags: automotive industry, Europe, GM, OEM Equipment

Published 6th March, 2017

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