PSA-Opel Marriage Best for Both Companies, Says GM's Barra

Steph Willems
by Steph Willems
psa opel marriage best for both companies says gm s barra

It comes across as a movie scene where the departing mother soothes the nerves of two children frightened by their father’s impending remarriage.

In this case, the children are the trembling employees of German General Motors division Opel, and the departing parent is GM CEO Mary Barra. Well, “departing” isn’t accurate, at least not yet. The American automaker is in talks with France’s PSA Group to potentially sell off Opel, as well as its Vauxhall sister division.

Yesterday, Barra spoke to employees at Opel headquarters, hoping to allay fears and quell protests from Opel’s works council and union, as well as the German government. Her words, or what we know of them, relayed the message, “Kids, it’s gonna be okay.”

“While there can be no assurance of any agreement, any possible transaction would enable PSA Groupe and Opel Vauxhall to leverage their complementary strengths, enhancing their competitive positions for the future in a rapidly changing European market,” Barra said in a message partly recovered by Reuters.

The CEO urged workers not to be distracted by the talks and to continue working as if nothing huge was going on in the background. Anyone looking for specifics on the potential takeover walked away disappointed.

GM and PSA “are simply not at that point in our discussions,” Barra said.

Assuming any takeover goes forward in a calm and sensible manner, Barra’s prediction could become reality. The two automakers, when combined, would carve a much bigger slice of the European auto market from Day 1, second only to Volkswagen Group. Minus the future challenges of sharing technology and platforms, the move would bring clout.

According to the European Automobile Manufacturers’ Association, Opel and PSA’s market share shrank last year. January sales from both companies made up 16.4 percent of the Euro car market, down from 17.1 percent the year before. In contrast, Fiat Chrysler Automobiles say its share rise, while VW stayed stable at 24.2 percent. Sales are also up at Renault and Daimler AG, while BMW AG and Toyota also posted market gains.

A source familiar with the talks told Bloomberg that GM wants many billions of dollars for Opel due to the brand’s improving outlook. By buying Opel, PSA could cut costs and invest money in the development of new technology. The French automaker’s finances are robust enough to handle the takeover, analysts claim.

[Image: General Motors]

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  • Thegamper Thegamper on Feb 16, 2017

    I am not sure on all the market statistics, but I think this makes sense for GM, not so sure about PSA. In any event, I would think that PSA must get some IP out of the deal. They can plunder current platforms, cut their R&D by half over the next product cycle anyway. Perhaps it gives them inroads they need for the German and UK markets that they just aren't getting with French brands. I think it will be more interesting to see how GM picks up the pieces in Europe. Do they try to sell Chevys again, because you know they wont give up on that market. What will their new European division look like, what cars will they sell? I don't think the entire continent will become a vast wasteland where GM dare not compete. They must have some plan for a footprint there.

    • See 5 previous
    • Samuelmorse Samuelmorse on Feb 17, 2017

      I am afraid that current GM management team , led by Barra, is so shortsighted that they only seek a short term quick solution to the European losses, so easy way to get rid of the problem is to sell European operations and get some cash. They lack seasoned executives with international experience and are unable to find a real driver to reshuffle the European business, closing some factories and return Opel/Vauxhall to profitability. Exiting the European market is one more step to give up on a global market presence in order to gradually become a second rank exclusive American carmaker with presence only in America. Very sad.

  • Big Al from Oz Big Al from Oz on Feb 17, 2017

    There is something I have noticed. A trend in corporate and business modelling of late. This is related to this potential GM deal to the deluded Trump view of business. Is the basic "American" business model/culture losing its steam? In other words not keeping pace with the competition?

    • Lorenzo Lorenzo on Feb 17, 2017

      The American business model has always featured adaptability to government rules and regulations. Too much of American free enterprise has become crony capitalism, with government conferring advantages to favored businesses. What you're seeing is classic, all-American corporate sucking up to a new administration that promises to rewrite the rules of economic engagement.

  • Inside Looking Out You should care. With GM will die America. All signs are there. How about the Arsenal of Democracy? Toyota?
  • DenverMike What else did anyone think, when GM was losing tens of billions a year, year after year?
  • Bill Wade GM says they're killing Android Auto and Apple Carplay. Any company that makes decisions like that is doomed to die.
  • Jeff S I don't believe gm will die but that it will continue to shrink in product and market share and it will probably be acquired by a foreign manufacturer. I doubt gm lacks funds as it did in 2008 and that they have more than enough cash at hand but gm will not expand as it did in the past and the emphasis is more on profitability and cutting costs to the bone. Making gm a more attractive takeover target and cut costs at the expense of more desirable and reliable products. At the time of Farago's article I was in favor of the Government bailout more to save jobs and suppliers but today I would not be in favor of the bailout. My opinions on gm have changed since 2008 and 2009 and now I really don't care if gm survives or not.
  • Kwik_Shift I was a GM fan boy until it ended in 2013 when I traded in my Avalanche to go over to Nissan.