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]