Cutting costs and boosting profitability – that’s the short version of why a deal for PSA and its Peugeot, Citroën and DS brands to buy General Motors’ Opel-Vauxhall business has been completed.
It’s clearly big news. Last year, Opel-Vauxhall's sales in Europe were around the 1.0 million mark and PSA's at around 1.5m. By combining the two, you get a group that moves well clear of Renault-Nissan into second place in the European sales charts, behind only the Volkswagen Group (3.6m sales in 2016).
PSA takeover of Opel and Vauxhall completed
PSA's purchase of Opel-Vauxhall also brings significant economies of scale. The number of vehicle platforms and engines that need to be developed for five brands producing cars competing in the same market segments would be significantly reduced. To that end, PSA has said it will switch over Opel-Vauxhall models to its own platforms as their replacments are launched, and it has taken ownership of GM's factories in which to build them.
Car makers are under more pressure than ever to make huge investments in the future of their businesses, not least around the issues of reducing emissions and technologies such as autonomous driving. Spreading that investment across more brands for a greater return lessens the risk of that investment in the first place.
Intriguingly, General Motors (GM) has kept hold of one part of its European operation, an R&D facility in Italy that leads diesel engine development. Clearly, GM thinks diesel still has a job to do.
If successful, this deal would solve some long-standing profitability problems for Opel-Vauxhall. Although it is back on track, Opel-Vauxhall often has an air of uncertainty around it. Questions over factories aren't going to go away, even if they are secure in the short and medium term. These issues will need to be confonted. The Vauxhall nameplate does at least look safe, though, with PSA saying it would respect the heritage of the two brands it has acquired.
Led by boss Carlos Tavares, PSA has returned to profit and is increasing its profit margins all the time. Having an extra 1.0m vehicles a year to add into that formula would be a nice problem to have in accelerating the recovery. A short-term challenge perhaps, but potentially a lucrative one in the long-term.
It’s five years since GM took a 7% stake in PSA, marking the beginning of the collaboration between the two firms. That stake was quickly sold off, but the collaboration continued, and we’re now finally seeing the first fruits of it with two new Vauxhall SUVs, the Peugeot 2008-based Crossland X and the Peugeot 3008-based Grandland X.
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Give them a chance for god's sake
For all this British brand , british factories going to close scaremongering bull**** give them a chance. If you were so concerened you could have bought it or if the government was strong after the brexit vote regarding foreign ownership they would have bought it and secured the jobs for britons. no, we will sit back at home do nothing and start moaning. Hope this deal brings profitability to better things to Vauxall. It's been a long time playing second fiddle to the Fords.
Ford closed all UK manufacturing & are still number 1 in UK
Ford closed all its UK manufacturing plants years ago & is still the best selling brand in the UK.
So it doesn't really matter to the UK public if it's made in the UK or not, never has done.
Unlike the rest of Europe that always supports its local car industry, the UK has always bought "foreign" & always will do. thats why after Brexit we'll still be buying all those BMW's & Mercs but at increased prices due to tarrifs!
I don't feel the gloom for