General Motors confirmed this morning the company is in talks with PSA Group about potentially selling Opel Vauxhall to the French automaker. The news comes a bit out of nowhere, but should not be a huge shock to those who follow the industry. GM and PSA have been working together since 2012.
Media reports out of Europe suggest talks between the two automakers are in “advanced” stages and that the talks are centered around PSA Group acquiring GM’s European brands. An acquisition would shed GM of two divisions that have lacked consistent profitability in recent years as stiff competition and a weak European economy have stifled sales.
GM acquired Vauxhall in 1925 and Opel in 1929 during the company’s spree of purchasing global auto brands as a means of expansion.
In recent years GM has tried to tighten ties between Detroit and Germany by building Opel products off of GM’s global architectures. For example, most Buick products have a corresponding Opel counterpart. However, despite the closer ties, Opel still failed to become profitable in 2016, which was the original goal within GM’s restructuring.
GM says the lack of profitability at Opel last year is at least partially attributed to fallout associated with the UK’s affirmation it will leave the European Union. This situation alone is likely playing into GM’s calculus to potential sell off its European assets to PSA.
PSA Group is currently executing an aggressive growth strategy in Europe, partially supported by a government bailout. At one time GM owned 7 percent of PSA Group, but it has since sold its stake but maintained its strategic alliance with the French company.
GM has issued a public statement confirming the talks, but the company is clearly attempting to downplay the situation:
Since 2012, General Motors and PSA Group have been implementing an alliance covering, to date, three projects in Europe and generating substantial synergies for the two groups. Within this framework, General Motors and PSA Group regularly examine additional expansion and cooperation possibilities, as well. PSA Group and General Motors confirm they are exploring numerous strategic initiatives aiming at improving profitability and operational efficiency, including a potential acquisition of Opel Vauxhall by PSA.
There can be no assurance that an agreement will be reached.