General Motors (GM) and Peugeot-Citroen (PSA) have announced the sale of GM’s Opel/Vauxhall subsidiary and GM Financial’s European operations to the PSA group, in a transaction valued at €1.3-billion and €0.9-billion, respectively.
With the addition of Opel/Vauxhall, which generated revenue of €17.7-billion in 2016, PSA will become the second-largest automotive company in Europe, with a 17% market share.
GM South Africa (GMSA) currently sells the Opel brand in South Africa. PSA is presented in South Africa through the Peugeot brand, with Citroën withdrawing from the market in 2016.
Peugeot Citroën South Africa (PCSA) notes that it is “too soon to comment on how this deal will affect PCSA and, therefore, all operations will continue as they currently do”. “The PSA group and Opel will work closely together to guarantee a smooth transition. Once we have further information about the South African operations, it will be communicated, as no timing has yet been given”.
GMSA says it “continues to market, distribute, sell and service Opel vehicles in South Africa” and that Opel has preserved its independence as part of the transaction and will work with PSA Group to ensure a smooth transition”.
Turnaround
“We are proud to join forces with Opel/Vauxhall and are deeply committed to continuing to develop this great company and accelerating its turnaround,” comments PSA chairperson Carlos Tavares on the transaction.
“We respect all that Opel/Vauxhall’s talented people have achieved, as well as the company’s fine brands and strong heritage. We intend to manage PSA and Opel/Vauxhall, capitalising 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 . . . are eager to take it to the next level.
“We are confident that the Opel/Vauxhall turnaround will significantly accelerate with our support.”
For GM, the sale represented another major step in the ongoing work that was driving “improved performance” at the company, notes GM CEO and chairperson Mary Barra.
“We are reshaping our company and delivering consistent, record results for our owners through disciplined capital allocation to our higher-return investments in our core automotive business and in new technologies that are enabling us to lead the future of personal mobility.”
PSA says the Opel/Vauxhall transaction will allow substantial economies of scale and synergies in purchasing, manufacturing and research and development.
Annual synergies of €1.7-billion are expected by 2026, of which a significant part is expected to be delivered by 2020, accelerating Opel/Vauxhall’s turnaround.
PSA expects Opel/Vauxhall to reach a recurring operating margin of 2% by 2020 and 6% by 2026, and to generate a positive operational free cash flow by 2020.