PSA in talks to buy Opel-Vauxhall from GM

FRANCE’S PSA Group has confirmed it is in talks with General Motors about acquiring the American giant’s European brands Opel and Vauxhall in a move that could have long-term consequences for Holden vehicle imports.

GM and PSA – the manufacturer of Peugeot, Citroen and DS vehicles – both released statements overnight saying they were exploring strategic opportunities aimed at improving profitability and operational efficiency, “including potential acquisition of Opel-Vauxhall by PSA”.

While the parties said the talks were “advanced”, PSA warned: “There can be no assurance that an agreement will be reached.”The move comes after GM reported its sixteenth consecutive annual loss in its GM Europe operations, although the $US257 million ($A335m) shortfall was an improvement on previous years, thanks mainly to the sales success of the new Astra.

In fact, GM said that it would have broken even in Europe except for financial repercussions of Britain’s Brexit vote.

If it goes ahead, a joint PSA/Opel/Vauxhall group would create a company with annual sales of about 4.3 million globally.

In Europe, the joint operations would account for about 2.5 million sales, placing it ahead of Renault-Nissan but behind long-time leader Volkswagen Group.

One way or another, a PSA takeover of Opel-Vauxhall would affect Holden which is depending on the European factories to supply increasing numbers of models for its Australian network as it winds back its Australian manufacturing this year.

Critical models such as the current Astra and the next-generation Commodore – based on the new Insignia that is due to be launched in Europe at next month’s Geneva motor show – could fall under PSA control should such a deal go ahead.

It is unlikely that a PSA acquisition would upset short-term Holden supply deals, as all parties would be mindful of the need for continuity and could ill-afford to lose the volume.

Holden communications director Sean Poppitt told GoAuto that GM remains committed to the Holden brand in Australia and Holden did not expect any changes to Holden’s vehicle portfolio.

"Right now we are focussed on ramping up Astra volume and preparing to launch the fantastic next-generation Commodore in 2018," he said.

Although details of any new ownership structure are under wraps, GM is highly likely to retain a large stake in the new-look European operation.

Since 2012, PSA and GM have joined forces on new-vehicle projects in an effort to cut costs, even though GM sold its 7.0 per cent stake in PSA to the French government in 2013.

Two Opel/Vauxhall SUVs based on PSA platforms, the small Peugeot 2008-based Crossland X and 3008-based Grandland X mid-sizer, are just now making their appearance.

In recently years, both Opel-Vauxhall and PSA have suffered acute financial losses, with the latter having to be bailed out by the French government and PSA’s Chinese joint-venture partner, Dongfeng Motor, which both acquired 13 per cent of the company in 2013.

As the French government and Peugeot family – which owns 14 per cent of PSA – are unlikely to bankroll any expansion into Opel-Vauxhall, it might well be cashed-up Dongfeng that is behind the latest move.

Last year, Dongfeng made and sold 618,000 Citroen, Peugeot and DS vehicles in China, making the Middle Kingdom PSA’s second largest market behind Europe with its 1.93 million sales in 2016.

Dongfeng is one of the big four Chinese automotive manufacturers, along with GM and Volkswagen partner SAIC Motor, Volkswagen and Toyota partner FAW Group, and Ford, Mazda and Suzuki partner Changan Motors.

Apart from PSA, Dongfeng also partners PSA rival Renault and its alliance partner Nissan, as well as Kia and Honda in China.

Interestingly, GM refused to sell its Swedish subsidiary Saab Automobile to a consortium backed by Chinese interests in the wake of the global financial crisis, reportedly under pressure from its Chinese partner SAIC.