By on March 6, 2017

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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]

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32 Comments on “GM Makes it Official: PSA Lands Opel in $2.3 Billion Deal, America Keeps Its Buick Supply (for Now)...”


  • avatar
    SCE to AUX

    “GM will gain 2.2 billion euros ($2.33 billion U.S.)”

    “GM must cover existing pension obligations for Opel employees — a responsibility worth about $3 billion”

    So GM is effectively paying $700 million to get rid of Opel? Sad.

    • 0 avatar
      quaquaqua

      Well, that just shows how much they were continuing to lose each year. I think it was 2012 when GM Europe said it had lost $15 Billion over the previous ten years.

    • 0 avatar
      stingray65

      It may be worse than that if the 2.2 billion euros is partly made up of the $689 in stock warrants that can only be cashed after 5 years, because in 5 years they might be worth nothing if the new super PSA doesn’t do well. Talk about negative brand equity for Opel and Vauxhall. Interesting to compare the money losing GM Europe valuation with the 10 years of money losing at Tesla which continues to enjoy a market valuation of billions.

    • 0 avatar
      MLS

      That $700 million is just about the same amount that Daimler paid Cerberus to take Chrysler off its hands in 2007, just nine years after paying $38 billion to acquire it in the first place.

      • 0 avatar
        ghostwhowalksnz

        Cerebus paid Chrysler $7 billion for 80% of Chrysler but in a convoluted way where as you say they ended paying $700 mill.
        So never take any notice of the headline amounts.
        Plus the original deal didnt involve Daimler paying anybody $38 bill.It was entirely shares in the new entity Daimler-Chrysler, 1 for 1 swap for existing Daimler stockholders and 0.547 shares for Chrysler. A merger of equals as they laughably called it at the time, but others said WTF.

        • 0 avatar
          MLS

          The bulk of the $7 billion that Cerberus “paid” for 80% of Chrysler was really a commitment to invest in the car maker and its captive finance arm. About $1.3 billion of the $7 billion total was paid to Daimler, but Daimler also agreed to invest $2 billion in Chrysler. So in the end, Daimler paid $700 million to be rid of Chrysler.

          But you’re right about the initial merger: there was no $38 billion payout. Still, I wanted to highlight the immense destruction of value in just nine years’ time.

          • 0 avatar
            ghostwhowalksnz

            You cant look at the loss of value in isolation. The GFC essentially broke the US financial system, and much of manufacturing with it, which had to be rescued the old fashioned way- by the Government.
            Strangely the ‘headline price’ of Opel couldnt even buy you 150 hipsters in a San Francisco warehouse office conversion that hasnt made any money ever , and probably never will.
            Irrational exurberance. Opel likely has more people working on headlights

  • avatar
    OldManPants

    “GM and PSA plan to collaborate on electrification projects”

    So PSA gets Bolt tech in return for on taking these pud brands?

  • avatar
    Robbie

    Who needs engineers anyway… car making is all marketing!

    • 0 avatar
      Lorenzo

      That’s what they were saying in Silicon Valley. Then Detroit started snapping up the startups. There’s a big difference between small investment vaporware with 30% margins, and massive capital investment in plant and equipment for a 10% return. Only Microsoft, in Redmond, Washington, knew better.

  • avatar
    Big Al from Oz

    Is this article a cut and paste from another source???

    I read this already this morning.

  • avatar
    WallMeerkat

    Two minds about this.

    The last time PSA Peugeot-Citroen took over the European arm of an American car maker was Chrysler Europe in the late 70s. They couldn’t licence the name, so dug out an old Talbot badge. They launched a Peugeot based small car (Samba) and rebased the large car project (Tagora) on the 604, which gave it a strangely narrow track. The Horizon (yes the European version of the Plymouth/Dodge Omni) replacement ended up as the out-of-sequence-numbered 309, the Alpine was axed to make room for the 405, and a Citroen AX based Samba replacement was axed. The badge lived on on commercial vans until the early 90s, Peugeot-Citroen having decided that 2 badges was enough to concentrate on.

    This time around they already have 3 marques, having spun off the luxury Citroen arm as DS, and are probably eyeing Volkswagen group enviously as showing that a varying range of models and marques can be spun off from a number of platforms and engines.

    One problem will be the image problem, Peugeot Citroen have a (not justified IMHO) problem with the “car advice guy down the pub” type having an opinion that French cars are unreliable, probably because he once owned a 1982 Renault 18.
    Vauxhall, in the UK at least, have a bit of an image problem, in that their cars are so ubiquitous and cheap as used options, that they are often modified by boy racers / what you seem to term in the US “ricers”. Then when they get their girlfriend preggers, they ‘upgrade’ to a Zafira with associated bad alloys and sunstrip stickers.
    Opel, as an observation in Ireland (where for some reason, despite being RHD, they still don’t sell Vauxhalls), seem to fare better if only because they’re still trading off their German origins.

    Perhaps, using the VW brands model, they could have the following:
    – Peugeot – a main brand, align with Opel, could be sold where French brands sell better than German brands
    – Citroen – something like Skoda, Citroens used to be sold at discounted rates, why not just have them as the solid-yet-cheap brand?
    – DS – a trendy premium brand like Audi
    – Opel – a sub-premium German brand like VW, sell Peugeots under this brand where, like the UK, French cars have an image problem
    – Vauxhall – leverage the VXR subbrand and “boy racer” image to use Vauxhall as the ‘SEAT’ style ‘sporting’ brand.

    • 0 avatar
      ghostwhowalksnz

      Doubt it will work.
      They have to stick with what they have and save money on development costs and compliance issues by using the same engines.
      Opel sell only 60K in France while PSA have 10x that. They have to stick with their mainstream brands in the main markets, otherwise they will lose volume.

  • avatar
    Corey Lewis

    They came down a bit from the $12B they wanted before, eh?

  • avatar
    dal20402

    Will be interesting to see if GM has any interest in trying to participate in the European market post-Opel with American-or Asian-designed product. They briefly tried to establish the Chevrolet brand but didn’t really commit to it, and it’s now gone from European markets.

    It would be an uphill struggle for them. The American and Chinese markets value different characteristics in cars than the European one, and the current American and Chinese products reflect that.

  • avatar
    Znueni

    Sad development for long-term GM fans. Seems SCEtoAUX and Stingray65 right about this being more “pay to be rid of it” than a sale. Barclays Bank assessment of European Pensions Hole remaining with GM (after Payment to PSA) still around $5 Billion, primarily in Germany, so still lots of GM Pain ahead even after Operations are gone.
    GM really is/was between a Rock and a Hard Spot so Kudos to GM for doing Something vs Nothing. They’d have critics either way.
    Next Hard Spot: Cadillac
    PS simple Math says European factory closures are next regardless of promises. Eleven GM factories are involved, if all have 4% Productivity increase/year this alone make at least 2 excess over next 5 years. Don’t think the closed ones will be French….or that VW will collapse and PSA gets their Market Share

  • avatar
    Steve_S

    So after a few years Buick will need all new platforms (meaning Chevy or Caddy platforms). How many existing Buicks are Opel? Is it just the Regal now?

  • avatar
    RHD

    Buicks currently come from Europe and China.
    Will the next generation of Buicks be rebadged PSA products, or will everything come from China? (I’m guessing greater unemployment numbers in the EU, and more dollars going to the Communists.)

    Buick: It’s the New GEO!

    • 0 avatar
      Lorenzo

      If I read the agreement correctly, the current generation of Opel-built Buicks will still come from Opel, along with parts. The next generation may well be designed in the Italian design center GM still owns, and the cars built in China, Korea, and maybe some even in the US (to keep Trump happy).

  • avatar
    brettc

    Oh well, no TourX for me I guess if it’s going to be a half Opel/half PSA situation. Seems too messy for me to deal with if I were to acquire one.

  • avatar
    thegamper

    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!

  • avatar
    stingray65

    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.

    • 0 avatar
      ghostwhowalksnz

      Its tough . Nissan got swallowed up by Renault. Mitsibishi lost its independence recently. Pugeot had to have a bail out. Fiat only survived by swallowing a big fish.
      You must have noticed the GFC changed everything

    • 0 avatar
      Varezhka

      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.

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