With the addition of two brands, which generated revenue of €17.7 billion in 2016, PSA will become the second-largest automotive company in Europe, with a 17% market share.
“We are deeply committed to continuing to develop this great company and accelerating its turnaround,” said Carlos Tavares, chairman of the managing board of PSA. “We respect all that Opel/Vauxhall’s talented people have achieved as well as the company’s fine brands and strong heritage. 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.”
PSA said the deal will enable it to achieve substantial economies of scale and synergies in purchasing, manufacturing and research and development. Annual synergies of €1.7 billion are expected by 2026 – of which a significant part is expected to be delivered by 2020, accelerating Opel/Vauxhall’s turnaround.
“For GM, this represents another major step in the ongoing work that is driving our improved performance and accelerating our momentum,” said Mary T. Barra, GM chairman and chief executive officer.
“We are reshaping our company and delivering consistent, record results for our owners through disciplined capital allocation to our higher-return investments in our core automotive business and in new technologies that are enabling us to lead the future of personal mobility.”
GM will also participate in the future success of the combined entity through its ownership of warrants to purchase shares of PSA. GM and PSA also expect to collaborate in the further deployment of electrification technologies. Existing supply agreements for Holden and certain Buick models will continue, and PSA may potentially source long-term supply of fuel cell systems from the GM/Honda joint venture.
The sale includes the UK sites at Ellesmere Port, Toddington and Luton, which employ about 4,500 people. Ellesmere Port makes the Astra and Luton produces the Vivaro van. Both plants have production contracts that are due to run to 2021 and 2025, respectively.
GM Europe has not made a profit since 1999 and the deal has raised fears about job losses.
“I am determined that we can convince the new boss, Mr Tavares, that it makes sense for him to continue to build in Britain,” said Len McCluskey, Unite the union’s general secretary. “Our plants are the most productive in the European operation, the brand is strong here, the market for the products is here, so the cars must be made here.”
McCluskey called on the government to play its part and address the uncertainty caused by Brexit, which it claimed is harming the automotive sector, in this week’s Budget.
“It is a perfect opportunity for the government to make it clear that it will preserve our trading arrangements and that it will invest for our auto sector’s future now, beginning with assistance for the reshoring of components,” McCluskey said.
McClusky added that the sector needs “every assistance from the government to give this sector a fighting chance”, including securing access to the single market and customs union. “This is the signal that the car industry needs in order to know that the UK government values this sector,” he said.
In response to news of the deal, secretary of state for business, energy and industrial strategy Greg Clark said he was “cautiously optimistic”.
“The conversations that I and the prime minister have had both with GM and PSA tell me that they intend to safeguard the plants and honour their commitments, and look to improve the performance and sales of cars. We want to hold them to those commitments,” he added.
