GM Makes It Official: PSA Lands Opel in $2.3 Billion Deal, America Keeps Its Buick Supply (for Now)

Steph Willems
by Steph Willems

As expected, General Motors started off the work week by officially announcing the selloff of its European division to France’s PSA Group.

The Opel and Vauxhall brands, which have stubbornly resisted all attempts to return to profitability, are no longer GM’s problem. It’s a complex deal, but on the product side, Americans can still expect a generation of Buick Regals based on the Opel Insignia.

By severing a 90-year corporate tie and offloading Opel/Vauxhall to PSA, GM has created a new second-biggest automaker in Europe. The French automaker will now control 17 percent of the market, topped only by Volkswagen Group.

GM will gain 2.2 billion euros ($2.33 billion U.S.) through the purchase of its automotive subsidiaries and GM Financial’s European operations, with the latter group acquired through a 50/50 joint venture between PSA and French bank BNP Paribas. In a joint media release, the automakers claim the lending unit’s platform and staff will remain in place.

“We respect all that Opel/Vauxhall’s talented people have achieved as well as the company’s fine brands and strong heritage,” said PSA chairman Carlos Tavares in a statement. “We intend to manage PSA and Opel/Vauxhall capitalizing on their respective brand identities. Having already created together winning products for the European market, we know that Opel/Vauxhall is the right partner. We see this as a natural extension of our relationship and are eager to take it to the next level.”

It’s not all gravy for GM, however. For its side of the deal, GM must cover existing pension obligations for Opel employees — a responsibility worth about $3 billion. The automaker’s Turin, Italy engineering center remains in American hands.

Claiming that the deal positions Opel and Vauxhall for long-term success, GM CEO Mary Barra stated “we look forward to our participation in the future success and strong value-creation potential of PSA through our economic interest and continued collaboration on current and exciting new projects.”

For GM, the deal includes $689 million in PSA share warrants, which can be exercised after five years. (No voting rights or governance comes attached to those shares.) Now that it is unburdened from its money-losing European divisions, GM can also repurchase more of its own shares — accelerating part of its long-term financial plan.

Just because it’s Splitsville for GM and Opel doesn’t mean the two automakers won’t remain strategically linked. GM and PSA plan to collaborate on electrification projects designed to give both companies a competitive edge in the expanding EV market. As GM’s Buick brand relies heavily on Opel for product, “existing supply agreements for Holden and certain Buick models will continue,” the automakers announced.

As PSA platforms trickle into the Opel lineup over the coming years, expect to see the gradual erosion of Buick’s European links.

The deal also leaves open the possibility of PSA sourcing fuel cells from a GM-Honda joint venture sometime in the future.

[Image: Opel]

Steph Willems
Steph Willems

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  • Thegamper Thegamper on Mar 06, 2017

    Im shocked in a way that the artist formerly known as the largest auto manufacturer on the planet, (8 years ago?) has totally bowed out of Europe (which I assume is the third largest market behind China and US). I have to believe that there is some plan to sell cars in Europe in GM's future. I wouldn't be surprised to see them try and sell Korean made cars there again, maybe even under a totally new brand. I cannot believe that they are just abandoning an entire continent. But, maybe they are. Focus on making money, its the new coolest thing!

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    • Guitar man Guitar man on Mar 07, 2017

      @RHD The Camaro is sold on the continent(no RHD model). All of the other vehicles sold with Chevrolet badges are made or sold by Opel.

  • Stingray65 Stingray65 on Mar 06, 2017

    GM - largest car producer in the world for more than 70 years. Now: 3rd place before vacating Europe. US - only profitable because of Chevy Pickups. China - only profitable because of Buick Everything else = money losers.

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    • Varezhka Varezhka on Mar 06, 2017

      Didn't Hyundai-Kia already pass GM for the 3rd place last year (per OICA statistics)? Anyways and more importantly, I feel like GM has always depended mostly on its US popularity for its profits and marketshare. Back in 60s, North America made up 1/2 of the worldwide automotive market by sales volume, so the most popular automaker here was the most popular automaker of the world. Not so much any longer, but with few exceptions like China, GM had failed to successfully exploit new and expanding markets. GM gets 90% of worldwide profit from the NA market, but I'm curious to see if that wasn't always the case.

  • 3-On-The-Tree I don’t think Toyotas going down.
  • ToolGuy Random thoughts (bulleted list because it should work on this page):• Carlos Tavares is a very smart individual.• I get the sense that the western hemisphere portion of Stellantis was even more messed up than he originally believed (I have no data), which is why the plan (old plan, original plan) has taken longer than expected (longer than I expected).• All the OEMs who have taken a serious look at what is happening with EVs in China have had to take a step back and reassess (oversimplification: they were thinking mostly business-as-usual with some tweaks here and there, and now realize they have bigger issues, much bigger, really big).• You (dear TTAC reader) aren't ready to hear this yet, but the EV thing is a tsunami (the thing has already done the thing, just hasn't reached you yet). I hesitate to even tell you, but it is the truth.
  • ToolGuy ¶ I have kicked around doing an engine rebuild at some point (I never have on an automobile); right now my interest level in that is pretty low, say 2/5.¶ It could be interesting to do an engine swap at some point (also haven't done that), call that 2/5 as well.¶ Building a kit car would be interesting but a big commitment, let's say 1/5 realistically.¶ Frame-up restoration, very little interest, 1/5.¶ I have repainted a vehicle (down to bare metal) and that was interesting/engaging (didn't have the right facilities, but made it work, sort of lol).¶ Taking a vehicle which I like where the ICE has given out and converting it to EV sounds engaging and appealing. Would not do it anytime soon, maybe 3 to 5 years out. Current interest level 4/5.¶ Building my own car (from scratch) would have some significant hurdles. Unless I started my own car company, which might involve other hurdles. 😉
  • Rover Sig "Value" is what people perceive as its worth. What is the worth or value of an EV somebody creates out of a used car? People value different things, but for a vehicle, people generally ascribe worth in terms of reliability, maintainability, safety, appearance and style, utility (payload, range, etc.), convenience, operating cost, projected life, support network, etc. "Value for money" means how much worth would people think it had compared to competing vehicles on the market, in other words, would it be a good deal to buy one, compared to other vehicles one could get? Consider what price you would have to ask for it, including the parts and labor you put into it, because that would affect the “for the money” part of the “value for money” calculation. An indicator of whether people think an EV-built-in-a-used-car would provide "value for money" is the current level of demand for used cars turned into EVs. Are there a lot of people looking for these on the market? Or would building one just be a hobby? Repairing an existing EV, bringing it back into spec, might create better value for the money. Although demand for EVs is reportedly down recently.
  • ToolGuy Those of you who aren't listening to the TTAC Podcast, you really don't know what you are missing.
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