Opel is now part of the PSA Group portfolio.
PSA Group Acquires Opel and Vauxhall From GM in $2.2B Deal
General Motors has sold Opel and Vauxhall to French-based automaker PSA Group. The deal is worth $2.2 billion, but the implications reach much deeper than just the price tag.
Why Sell Opel?
In 2016, Opel was on pace to become profitable for General Motors for the first time after several years of losing cash. Thin profit margins and high wages aside, Opel found a way to make money. And then, Brexit happened.
Uncertainty in the automotive marketplace yet again meant GM’s European brands bled money instead of turning a profit.
GM can shift their focus to the North American and Chinese markets now that they have sold off Opel and Vauxhall. The deal also provides flexibility to explore emerging markets too, which GM needs to do in order to remain competitive.
PSA Scratching Back
The move entrenches PSA as the second-largest European automaker behind Volkswagen. Renault had been sitting in second place for years, despite a steady decline in sales. And it’s no secret that Volkswagen has suffered immensely in recent times on the heels of Dieselgate. PSA Group hopes to capitalize on the heavily saturated market.
Adding Opel and Vauxhall to the popular Peugeot and Citroen brands means adding 1.2 million vehicle deliveries to PSA Groups annual sales.
Says PSA CEO Carlos Tavares, “It gives us the opportunity to become a real European champion. Our plan is to build a common future for Opel and Vauxhall and fix the existing issues.”
On the Outside…
General Motors is trying to spin the sale as a positive move. But make no mistake: it signals yet another failure for the North American automaker.
Formerly the largest automotive manufacturer in the world, GM has been surpassed by Toyota and Volkswagen for that title. The stains from the US government bailouts and bankruptcy in 2009 still mar their company fabric. And dissolving popular brands like Pontiac, Saturn and Hummer may never be forgiven by faithful GM followers.
It’s the right move for General Motors to make at this time, abandoning the European market in which they were clearly out of their depth. There’s no hiding the walk of shame as they head back to the US, though.
