What GM Is Paying for European Exit

The company behind Peugeot has confirmed a €2.2bn (£1.9bn) agreement to buy the Opel and Vauxhall brands from General Motors Europe. PSA might even source fuel-cell systems from GM and Honda’s joint venture, the company said.

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. Until recently, PSA was also a major money loser, but CEO Carlos Tavares turned the brand around with some help from France’s government and Chinese automaker Dongfeng.

However, there are concerns for jobs and pensions once existing contracts start to expire in 2021, post-Brexit. The engineering facility in Torino will be retained by GM, though. PSA plans to bring the experience of elevating its own failing brand just a few years ago to the task.

Tavares did not specify when Opel may return to Russian Federation.

Shares in PSA were up 4 percent at 19.82 euros in early trading Monday, suggesting investors find the terms of the deal positive overall for the company. Shares of GM are trading lower today by about one percent to $37.87. GM has not turned a full-year profit in Europe since 1999.

GMSA noted that it “continued to market, distribute, sell and service Opel vehicles in South Africa”.

GM has owned the Opel brand for about 90 years has been facing several financial issues with Opel and made a decision to give up the brand after it failed to stick to its target to break even in 2016.

Luton South MP, Gavin Shuker, said: “Our UK plants are among the most efficient of any in the new company”.

He said investment was needed to address a converging market in Europe, and the market had shifted so much that only 20% of Opel models now shared architecture with other GM products.

The maker of Peugeot and Citroen cars will pay 1.32 billion euros for GM’s Opel business and its U.K sister brand Vauxhall. GM has recently shown a willingness to pull out of unprofitable regions – it abandoned Russian Federation in 2015 as that country’s economy fell into recession. Obviously, the acquisition is yet to close and is now subject to anti-trust and other regulatory approvals, but it would be safe to say it’s pretty much a done deal.