Ahead of a press conference in Paris on Monday, French carmaker PSA announced the acquisition of General Motors’ (GM) European subsidiary, which includes the Opel and Vauxhall brands, for 1.3 billion euros ($1.38 billion).
PSA said in a statement it was also buying GM Europe’s financial operations for 900 million euros in a joint deal with bank BNP Paribas.
With GM’s Opel and Vauxhall operations, PSA would become Europe’s second-largest carmaker behind Volkswagen, but overtaking Renault-Nissan.
The takeover includes six assembly plants and five component-making facilities and some 40,000 employees. PSA CEO Carlos Tavares said the firm was “deeply committed to continuing to develop this great company [Opel] and accelerating its turnaround.”
But at a news conference on Monday, he told reporters that it was not PSA’s plan fight side by side with the trade unions. Referring to Opel, he said “a company that has been in the red for a decade naturally poses a problem.”
“I think the trade unions are wise enough to understand that the current situation has to be improved.”
Ending decades of problems?
The PSA-Opel/Vauxhall merger comes after almost two decades of crisis for GM’s European division. Despite remaining a familiar sight on German roads, Opel with its lightning logo and its British sibling Vauxhall haven’t booked a profit since 1999.
Opel executives had managed to reduce losses in recent years and stop the slide in the carmaker’s market share only to run up against a slump in the value of the pound after the UK’s vote to leave the European Union.
Britain is the biggest market for the Insignia and Corsa models, sold there under the Vauxhall brand.
Experts have frequently said Opel has not been successful in reducing overcapacity at its factories. That’s also something that needs to be addressed by the new French owners. “Opel suffers more from overcapacity than other European carmakers, meaning it has to offer big discounts to keep up a certain level of production, and that hits its profitability,” CAM researcher Stefan Bratzel said in a statement.
PSA has already indicated it wants Opel to remain a German company. But that also implies that the automaker is called upon to restructure its own business without much financial help from the French. Recently, Opel has turned to celebrities to boost its image across Europe.
Critics of the move have argued that Opel’s biggest mistake has been investing too much money in marketing at the expense of its products.
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