PSA Group agrees £1.9bn Vauxhall deal 06 | 03 | 2017
FRENCH CAR MAKER Peugeot-Citroen has agreed a €2.2bn (£1.9bn) deal to buy the European division of General Motors, including Vauxhall. Vauxhall — represented by principal groups, including Arnold Clark and Peter Vardy — has been the leading new car seller in Scotland for the past nine years, with the Corsa (pictured) the top seller in seven of the last eight years.
The deal, confirmed this morning, raises fears about job losses at Vauxhall, which employs around 4500 at its factories at Ellesmere Port and Luton. GM Europe has not made a profit since 1999.
The takeover of GM’s Vauxhall and Opel plants means PSA Group will become the second largest carmaker in Europe, behind Volkswagen.
"We are confident that the Opel/Vauxhall turnaround will significantly accelerate with our support, while respecting the commitments made by GM to the Opel/Vauxhall employees,” Carlos Tavares, chairman of PSA's managing board, said.
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Significantly, GM chairman and chief executive Mary Barra pointed the finger at Britain’s decision to leave the European Union as one of the principal contributing factors behind the sale.
She insisted Opel/Vauxhall would have broken even last year had it not been affected by the sharp drop in the value of the pound following the Brexit vote.
Globally, PSA sold 3.5m units last year, while Vauxhall/Opel sold 1m. Taking on the GM brands means PSA's volume will rise to 4.5m at the current sales rate.
Tavares said PSA will respect existing brand identities and "help accelerate the turnaround of Opel/Vauxhall”. Last year the European division of GM lost £200m.
“We respect all that Opel/Vauxhall’s talented people have achieved as well as the company’s fine brands and strong heritage,” he continued.
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“We intend to manage PSA and Opel/Vauxhall capitalising on their respective brand identities. Having already created together winning products for the European market, we know that Opel/Vauxhall is the right partner. We see this as a natural extension of our relationship and are eager to take it to the next level.”
PSA also highlighted that the new deal will create "substantial economies of scale in purchasing, manufacturing and R&D.” These are projected to lead to annual savings of €1.7bn by 2026, though a significant part is expected to be delivered by 2020. According to Peugeot-Citroen, this will “accelerate Opel/Vauxhall’s turnaround".
Naturally, as current Opel/Vauxhall models come to the end of their production cycles, the replacements will shift from being built on GM platforms to those of Peugeot-Citroen.
Vauxhall’s bestselling Astra isn’t due to be replaced until 2021, which points to production jobs at its plants in the UK being safe until at least 2021.
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Jim McGill