PSA Group, General Motors reportedly strike a deal over Opel

Posted March 06, 2017

The supervisory board of French carmaker PSA has approved the takeover of General Motors' European subsidiary, which includes the Opel and Vauxhall brands, and a formal announcement is expected on Monday, an informed source said on March 3.

GM's European business has failed to book a profit since 1999.

PSA boss Carlos Tavares says buying Opel offers an "opportunity to create a European vehicle champion" and at the same time it will help the conglomerate sell more than five million cars each year.

Vauxhall has 4,500 employees in the United Kingdom at its plants in Ellesmere Port and Luton, while Opel has a workforce of about 19,000 people in Germany.

PSA and GM Europe sold a combined 4.3 million vehicles past year and posted revenues of 71.6bn euros. Both companies confirmed last month that they were in talks about a sale. However, the German Opel plants are a whole new ball game altogether.

"The UK market is the largest market in the European Union for Vauxhall/Opel so GM does have a moral obligation not to turn its back on the communities and workers who have helped make this company what it is today", Unite general secretary Len McCluskey said.

GM has been struggling to make money in Europe for years and almost sold a majority stake the unit in 2009.

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For PSA, the deal caps a stellar two-year recovery under chief executive Carlos Tavares, who is expected to slash costs at Opel in a bid to generate savings of up to 2bn euros a year.

Tavares has turned PSA's performance around since taking the helm, partially through a programme of aggressive cost-cutting, culling jobs in a successful bid to boost profitability.

United Kingdom business minister, Greg Clark, said that his meeting with Tavares was constructive and reassuring.

"From my initial conversations I think it is understood that Vauxhall's plants are very efficient".

Sales volume is critical in Europe's largely saturated mass-market segment, and adding GM's roughly 1.2 million in annual deliveries in the region would help PSA spread the cost of developing new cars and engines across a larger number of vehicles.

Detroit-based GM has been pressing for a deal barring those legacy Opel models from markets including China, Russia and Latin America, sources have said.