Opel has undoubtedly provided valuable resources for General Motors for decades and it’s giving up quite a bit in the deal to sell the brand, and Vauxhall, to France’s PSA Groupe.
But even PSA Groupe is remaining cautious over any ambitious returns on investment as it takes ownership of the two brands by the end of this year. Reuters reports PSA Groupe CEO Carlos Tavares expects Opel to rack up additional losses through 2017.
“A certain number of good achievements have been made under General Motors’ leadership,” Tavares told shareholders at PSA’s annual general meeting in Paris, highlighting sales growth and reduced losses at the GM brand. “But we must recognize that the losses are real and probably will be again in 2017.”
Before PSA was in on any sort of deal, Opel management pointed the blame at Brexit, which shifted economies after the shock referendum passed last year. Opel itself called the vote a “bad omen” for future business in Europe. Vauxhall, in turn, raised prices on new vehicles to counter shifting economics.
Opel hasn’t turned a profit since 1999 while under GM leadership, though the U.S. automaker most recently poured substantial resourced into the brand for a major overhaul. Opel was supposedly on target to return to profitability in 2016. As mentioned, Brexit put a halt to any profitability.
PSA Groupe agreed to take on Opel, Vauxhall and their manufacturing and engineering footprints for $2.4 billion. PSA Groupe will become the second largest auto conglomerate after Volkswagen when Opel and Vauxhall are officially added to the automaker’s stable.