Potential purchase by owners of Peugeot and Citroën would create Europe’s second-largest carmaker

This article is more than 3 years old

This article is more than 3 years old

General Motors is in talks to sell its European arm Opel, which includes the UK’s Vauxhall, to the company behind Peugeot, after branding Brexit a “speed bump” that was slowing efforts to turn the loss-making division around.

GM and France’s PSA Group, which also owns Citroën, said they were discussing “numerous strategic initiatives ... including a potential acquisition of Opel”.

The admission prompted calls for GM to clarify the future of its Vauxhall plants in Luton and Ellesmere Port in Cheshire, which together employ around 4,500 staff.

Justin Madders, MP for Ellesmere Port and Neston, said: “We need to stress, if there are to be new owners, that we have very efficient operations over here in the UK.

“They’ve proved themselves to be excellent in comparison to other European plants.”

He stressed that if PSA buys Opel, it should not forget that the UK is the second-largest car market in Europe, but warned that whoever owns Vauxhall would need to be protected in Brexit negotiations.

“We want to get to a point where whatever deal is agreed is one that doesn’t introduce any barriers of tariffs to the car industry.”

In a letter to staff, GM offered few details but said it would “seek to ensure any transaction would serve the best interests of all our respective important stakeholders”.

It also urged staff not to let the possibility of a sale become a “distraction”.

GM, the world’s third-largest carmaker and the biggest in the US, has suffered more than $15bn of losses at Opel since 2000.



It nearly sold the division after going bankrupt in 2009 but reversed the decision in a bid to maintain a foothold in the potentially lucrative European market.

It had hoped to break even by now, but posted an annual loss of $257m (£206m) for 2016 earlier this month.

Chuck Stevens, GM’s chief financial officer, warned last year that the company was “prepared to take whatever action is necessary” to get its European business back on track.

GM described the UK referendum result as a “speed bump on our path to where we want to take the business” and warned that it would write down the value of GM Europe by $400m because of the fall in the value of the pound.

Talks over a sale are likely to reawaken concerns over the future of Opel’s UK operations, just four years after its Ellesmere Port plant came perilously close to closing.

GM kept the plant open only after Vince Cable, then business secretary, travelled to Detroit to agree a deal and reassure the firm about the government’s commitment to the industry.

But any change in the ownership of Opel could render the agreement worthless, particularly in the light of oversupply in the European car market.

Michelle Krebs, senior analyst at AutoTrader in the US, said: “I believe it’s still the case that there’s excess capacity in Europe so that’s an issue that’s been discussed for years.

“What happens to jobs, where will they be, those are questions to ask if this goes forward.”

She said the EU referendum result was likely to be a factor if GM pulls out of Europe altogether.

“GM, especially in light of Brexit, must look at its European operations and see the prospects are low [that] it will make a profit any time soon. So it’s not surprising they’re considering some moves.”

She said the talks could result in a strategic alliance similar to the tie-up between Renault and Nissan.

But if the two firms opt for a sale, the combined might of the Peugeot, Citroën and Opel brands would see PSA Group overtake Renault to become Europe’s second-largest car firm behind Volkswagen.

GM and PSA Group already cooperate on the production of minivans and SUVs but their partnership was diminished in 2013 when GM sold a 7% stake in the French firm for £250m.

In a statement on the company’s website, GM said: “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.”