Just in case there wasn't enough going on this week! The day before the first Geneva motor show press day it has been confirmed that, after many weeks of speculation, Opel and Vauxhall will become part of the PSA Group. It's a deal worth 2.2 billion euros (with Opel valued at 1.3 billion and Vauxhall at 900 million) that will make PSA the second largest car company in Europe behind VW, with a 17 per cent market share.
The brands of course now leave General Motors, taking away a large chunk of its presence in Europe. However its view on the sale is naturally quite positive, GM CEO Mary Barra commenting that "We are reshaping our company and delivering consistent, record results for our owners through disciplined capital allocation to our higher-return investments." That means they get some money, right?
The more interesting discussion is on PSA's plans for Vauxhall in particular given its current state - in 2016 Vauxhall made a loss of £200m and, well, there aren't any class leaders in its model range. There is though a strong loyalty to the brand in the UK. PSA Chairman Carlos Tavares has said "We are proud to join forces with Opel/Vauxhall and are deeply committed to continuing to develop this great company and accelerating its turnaround." What that actually means is of course open to interpretation at the moment, so fire away now with your best speculation!
An additional facet of the deal is an expected collaboration between GM and PSA on alternative fuel technology. There is already a supply agreement in place for electrification tech in Holdens and certain Buicks, with a potential said to be there for fuel cell supply as part of the GM/Honda joint effort. Mutually advantageous then, hopefully.
And the overall plan? Predicted 2026 "annual synergies" are 1.7 billion euros, with a
"significant part" of that set to be in place by 2020. PSA apparently expects Opel and Vauxhall to reach a recurring operating margin of two per cent by 2020 and six per cent by 2026, with a positive operational cash flow also the aim for 2020.
As for the actual cars that will be built as part of this agreement, the existing Opel/Vauxhall products will continue to be built under intellectual property licenses from GM until their PSA replacements arrive. While GM will retain an engineering centre in Turin, PSA will now assume control of six assembly and five component manufacturing facilities (Luton and Ellesmere Port of course included in that) as well as the Russelsheim engineering centre. That totals around 40,000 people.
It's a significant move for the industry then, but potentially the lifeline that Opel/Vauxhall needs. What would you want to happen as part of the takeover? What do you think will actually happen? This one is going to run for a while!
PHers are, of course, already discussing the Opel/Vauxhall sale. Join the chat here