We’ve heard for weeks now that GM wants to dump its money-losing Opel brand onto PSA Group, a French manufacturer of Citroen and Peugeot cars, among others. Now, after all the rumors, Reuters says the deal is done.
The news site says its two sources familiar with negotiations have confirmed that PSA has agreed to buy Opel from the General, and that the parties plan to make the announcement on Monday. Reuters writes:
The board of PSA, which makes Peugeot and Citroen cars, approved the deal on Friday, with an announcement planned for Monday, one of the people said.
The article goes on, saying 2016 marks the 16 consecutive year of losses for GM’s European devision, making GM’s willingness to ditch the brand—over which it has held control for 90 years—not all too surprising.
But PSA doesn’t seem too concerned about GM’s woes in Europe, as the Paris-based automaker sees lots of potential in GM’s brand, with Bloomerg reporting last month:
PSA is considering the takeover to boost its scale, get access to Opel’s engineering and electric-car technology as well as reap savings from joint purchasing and eventually cost cuts...
The writing has been on the wall for some time for GM’s Opel; GM’s CEO Mary Barra told her staff in February that a PSA-Opel deal would be a good thing for both GM and PSA alike. Then, a week later, PSA Group’s CEO Carlos Tavares discussed how Opel would give his company a chance to “create a European car champion” and even to branch out beyond Europe, with Automotive News reporting:
PSA would cut costs, combine development efforts and exploit the appeal of German engineering. Opel, based outside Frankfurt, could in turn serve as a growth driver with potential expansion beyond its home region, a role that was limited under GM.
So clearly, both parties wanted this. And now, after all the talk and speculation, Reuters says it’s finally done; GM is pulling out of Europe.
But it hasn’t been an easy road. Reuters says there were sticking points about $10 billion in Opel pension liabilities, and also about whether Opel—once under PSA ownership—would be allowed to compete against Chevy in China. Reuters talks about those two points of contention, saying:
The “non-compete” issues were finally resolved as GM agreed to inject “substantially” more into the pensions than the $1 billion to $2 billion it had initially offered, another person said on Friday.
There were also a number of concerns about potential job cuts, and though PSA has agreed to “respect existing [job] agreements,” Reuters’ sources say it wouldn’t be surprising if some of Opel’s 38,000 people were laid off to help turn the bleeding brand around. We’ll see what happens on that front in the coming weeks.
We’ve reached out to Opel and PSA Group for comment, and will update when we hear back.