Clarification of PSA GROUP

Marco Green
February 16, 2017

Unite union is seeking assurances for United Kingdom auto plants in line with Nissan's, after PSA and General Motors confirmed they were in talks over a possible sale of GM's European business.

Shares in General Motors are set to open up 4.4% this morning after France's PSA Group, which makes the Peugeot and Citroen brands, confirmed that it is looking at a possible acquisition of GM's struggling European operations.

General Motors is said to be in advanced discussions for the sale of Opel and Vauxhall to the group that owns Citroen, DS Cars and Peugeot.

The PSA Group is reported to be in talks to buy Vauxhall and Opel from GM.

The French government holds a 14% stake in PSA, as does the Peugeot family. GM tried to sell off Opel at the height of the recession, but concerns over Russian-backed bidders gaining control of vital patents and technology eventually killed the deal. Opel lost $257 million in 2016, which was an improvement on the $813 million it lost the previous year. With PSA in the driver seat, Opel might find a new address and parent in 2017.

A concession of Opel, Vauxhall, or both would mean a temporary forfeit by GM in the global vehicle delivery race.

It had hoped to reach break-even in Europe by now, but previous year posted a loss of $257 million despite selling 1.1 million vehicles, and even as GM as a whole turned in a robust profit of $9.4 billion.

GM might anyway have to look at further reducing capacity in Europe to try to get back in the black, and with Brexit induced currency headwinds may have simply decided pull the plug and sell out - rather than face the negative publicity of closing plants. This arrangement dates back to 2012, when GM took a 7pc stake in Peugeot as they formed an alliance in attempt to weather the then troubled European vehicle market.

The negotiations centre around plans for PSA to take a majority stake of General Motors' European subsidiary's Opel and Vauxhall in a deal that could have significant implications to the European automotive industry.

The news of the potential acquisition was received as a good news from investors, which is claimed to have increased the share values of PSA Group and GM. GM has not made a profit in Europe for more than 15 years.

GM and PSA Group formed an alliance in 2012 in an attempt to make production more efficient. Instead, Opel and Vauxhall continued to hold just 6% of the European market.

GM boss Mary Barra heads to Germany to explain why Opel bosses and unions knew nothing of impending sale to Peugeot.

Other reports by Click Lancashire

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