Peugeot and Citroen owner buys Vauxhall-Opel for €2.2bn

PSA has announced a €2.2bn agreement to buy General Motors’ lossmaking Opel division in a deal that will make the Peugeot and Citroën owner the second-largest carmaker in Europe.

GM’s Opel/Vauxhall subsidiary has lost almost $20 billion since 1999.

A new partnership between PSA Group and worldwide banking group BNP Paribas will become responsible for managing GM’S financial operations in Europe – with each company holding a 50 per cent stake.

Perhaps most importantly, the sell-off of Opel/Vauxhall gives GM more freedom to focus on its current priorities, like electric vehicles, autonomous technology, mobility offerings, and growing auto markets like China.

“Opel has been making red ink for 10 years, and burning approximately 1 billion in cash every year”, Tavares said.

The companies have called a joint news conference for 3.15 am ET on Monday, and GM will brief investors at 7.45 am. “Opel was reined in too much by GM”, he added.

Between them the two carmakers employ around 13,000 people in Spain.

Carlos Tavares, chairman of the Managing Board of PSA, and Mary T. Barra, GM chairman and chief executive officer. Cadillac dealers there also sell a small number Corvettes and Chevrolet Camaros. This will enable PSA Group to become the second largest auto manufacturer in Europe, with a market share of 17 per cent after the Volkswagen Group. Of most significance to the United Kingdom is the acquisition of the Vauxhall, which employs around 4,500 staff across its plants in Ellesmere Port, Toddington and Luton. But analysts say that turning around Opel will be his biggest challenge yet.

The PSA Group has paid the equivalent of R30 billion for General Motors’ European arm – which produces Opel and Vauxhall. GM as a whole has seen record financial performance in recent years, but experts are predicting little to no growth in the USA and European markets for the next several years.

Christian Stadler of Warwick Business School warned that job cuts likely will be coming: “PSA has done it before and there is no other way to realistically achieve the cost savings they have in mind”.

USA investors yawned at the sale.

Business Secretary Greg Clark said: “Vauxhall has a long history of success in this country and we are determined to see that continue”.