PSA Group buys carmakers from General Motors for £1.9bn and wants to turn them around without plant closures or job cuts

The chief executive of the French company behind Peugeot and Citroën has vowed to turn Opel and Vauxhall around without factory closures or job cuts, after agreeing to buy General Motors’ lossmaking European arm for €2.2bn (£1.9bn).

The acquisition of Opel/Vauxhall, which generated revenues of €17.7bn last year, will transform PSA Group into the second-biggest carmaker in Europe, after Volkswagen.

PSA’s chief executive, Carlos Tavares, talked of creating a “European champion”. He pointed to the French company’s track record and said employees at Vauxhall in the UK and Opel in Germany would be given a chance to reach the necessary “benchmark” of efficiency.

PSA sale no surprise to Vauxhall workers used to facing uncertain fate Read more

GM and PSA said the deal would create annual savings of €1.7bn in purchasing, manufacturing, and research and development by 2026, with most savings likely to be achieved by 2020 from purchasing. Tavares said the estimate did not include any job cuts.

He told a press conference in Paris: “We do not need to shut down plants … We believe we need to trust the talents of people. They always come up with ideas and solutions we could not imagine … Shutting down plants is rather simplistic.”



Tavares stressed that he had not closed a single factory since he took over at PSA in 2014. The carmaker, which came close to bankruptcy and was bailed out by the French government and Chinese investors, shut a French factory just before the former Nissan executive took the helm.



Tavares reiterated that he would honour previous agreements GM made with unions at Opel and Vauxhall, suggesting that jobs at Vauxhall’s Ellesmere Port and Luton factories would be safe until 2020.

His assurances also suggest production of the current Vauxhall Astra at Ellesmere Port will be guaranteed until 2021, while the Vivaro van in Luton would be guaranteed until 2025. The Unite union said talks on a new model to replace the Astra would need to begin by late 2018.

GM’s chief executive, Mary Barra, said without last summer’s Brexit vote, Opel and Vauxhall would have moved into profit last year. She described the deal as a “win-win” for all three companies. Opel/Vauxhall sold 1.16m cars in Europe last year, up 4.1%, giving it a 5.7% share of the market.

About half of Opel’s 38,200-member workforce are in Germany. The carmaker, which was founded by Adam Opel in Rüsselsheim in 1862, has plants there, including a big R&D centre where 7,700 people work, as well as in Kaiserslautern and Eisenach in east Germany.

Tavares, Barra and the Opel chief, Karl-Thomas Neumann, will address Opel workers in Rüsselsheim this afternoon, a session that will be broadcast to other factories. Tavares will then fly to Switzerland for the Geneva motor show.

Vauxhall employs about 4,600 people at Ellesmere Port and Luton, with a further 20,000 working in the carmaker’s showrooms; they also support a further 18,000 supply chain jobs.

Vauxhall and Opel staff in Rurope Vauxhall and Opel staff in Rurope

Tavares said in a soft Brexit scenario, the cheaper pound could boost Vauxhall’s competitiveness, and if the UK left the EU’s single market in a hard Brexit scenario, it would be a “very nice opportunity” to source more car parts from inside the UK, so costs and revenues were recorded in sterling.

This would mean the UK supplier base needed to be developed, something the UK government “totally understands”, Tavares said.



Len McCluskey, head of Unite union, said Vauxhall workers had endured a “nerve-racking” few weeks and needed assurances over the long-term future of the factories. He said: “Our plants are the most productive in the European operation. The brand is strong here, the market for the products is here, so the cars must be made here.”

Most of Opel/Vauxhall’s European and UK pension plans will remain with GM, with the exception of the German pension fund and some smaller plans, which will be transferred to PSA. GM will pay PSA €3bn for full settlement of the pension obligations. It appears that all Vauxhall pensions will be kept under GM. Vauxhall’s pension plan has a deficit of £1bn while the Opel pension deficit is estimated at nearly €7bn.

The long-awaited announcement of the deal is expected to trigger a political battle between the French, German and UK governments to protect jobs and factories in their countries.

Facebook Twitter Pinterest Greg Clark, business secretary, welcomed the deal. Photograph: Victoria Jones/PA

Greg Clark, the UK business secretary, said: “Vauxhall has a long history of success in this country and we are determined to see that continue. The government welcomes the assurance by PSA that they will respect the commitments made by GM to Vauxhall’s employees and pensioners.

“We will continue to engage and work with PSA in the weeks and months ahead to ensure these assurances are kept and will build on the success of both sites for the long term. The prime minister and I have been in close contact with the PSA Group and General Motors and they have been clear this deal is an opportunity to grow the Vauxhall brand, building on their existing strengths and commitments.”

The Labour MP for Ellesmere Port, Justin Madders, is meeting Clark on Monday, and said the Vauxhall takeover was an important test of the UK’s industrial strategy. He added: “There should be no doubt that one of the biggest selling points to UK consumers is that Vauxhall is a British brand that supports British jobs. That is something that I know will be stressed to PSA.”

The Liberal Democrats warned that jobs were still far from safe at Vauxhall. Its leader Tim Farron said: “There are bound to be cutbacks, and with the British government unable to guarantee car makers they will have access to the single market post-Brexit, the danger is that jobs will be cut in the UK rather than in Germany or France.”

Japanese carmaker Nissan has cast some doubt over its long-term commitment to the UK, and BMW might start making the British Mini in Germany.

Labour MP Gavin Shuker, who represents Luton South, said: “Glad to see the uncertainty over the PSA/GM deal is now over. Our UK plants are among the most efficient of any in the new company. They deserve a bright future. Now government needs to play its part, delivering a Brexit deal that keeps Vauxhall building in the UK.”

Labour MP Angela Eagle, whose Merseyside constituency of Wallasey includes many Vauxhall workers, tweeted about the deal:

Angela Eagle (@angelaeagle) Govt must be proactive after PSA GM sale to protect many thousands of jobs at Vauxhall and in the supply chain #PSAsale

The deal is expected to close towards the end of this year and needs approval from antitrust authorities.

