PSA Groupe and General Motors closed the sale of Opel, Vauxhall and the American automaker’s facilities earlier this year, but the French automaker has come back to the table, and not for good reasons. Reuters reported on Wednesday that the automaker seeks about half of the sales price back after it discovered the state of Opel’s CO2 emission challenges.
Specifically, PSA believes it was misled on the brand’s emission strategy, which puts Opel at a serious disadvantage in the very near future. The French automaker will have to move models onto its own platforms and plant its own powertrains and emission technology in the cars quicker than once imagined to meet looming European Union emission limits planned for 2020.
According to sources close to PSA, the automaker said GM misrepresented Opel’s CO2 trajectory during sale negotiations. Opel was nowhere near on target to meet emission standards in the EU under GM leadership and the U.S. automaker’s plan relied heavily on Ampera-e sales. The problem is the Ampera-e loses about $12,000 per car sold. A source said the plan was not economically viable.
“Their technical solution was economically unviable and would have led to enormous losses,” said one source. “So the first thing you do is drop that (product) line, but then the fleet emissions explode.”
According to the most recent study published last year, Opel was on track to miss its emission targets by 3.7 grammes with the Ampera-e. Without it, the figure shot up to 6 grammes. But, PSA quickly discovered the figure is actually around 10 grammes and the plan relied on unrealistic amounts of diesel-vehicle sales. With the large emission gap, PSA would be responsible for fines over $1 billion.
A source added, “People who had worked on the closing realized quite quickly that there were these big discrepancies. They had been swept under the rug.” GM CEO Mary Barra noted the market’s difficulties before the deal officially closed and said “increasing regulatory and compliance costs” was a major reason to sell off both Opel and Vauxhall. The report noted Opel’s powertrain lineup is about five to seven years behind where it should be to meet emission targets.
PSA hasn’t filed a formal legal claim, though both companies have reportedly spoken about the grievances surrounding the deal. The French automaker may seek up to €800 million, or around $951 million. PSA paid roughly $2.6 billion to close the entire sale. Meanwhile, GM’s bill to exit Europe could grow past the $5.5 billion mark.
Comments
From the start, Carlos Tavares transformed this buyback in a “soap opera”. Firstly, he bragged of making better than GM. Next, it was the unproductive plants and the lack of efficiency. Now(the new episode), he discovers that Opel couldn’t abide the 2021 pollution rules! Again, that’s a mean to put any pressure on the workers and unions and , in the same time, he casts the blame on GM for the future jobs cut. If Opel had been a profitable company without issues, it’s plain! GM wouldn’t have sold… PSA wouldn’t have bought without analyzing the Opel’s situation, it’s a lie!
Where was the due diligence. GM paid a lot to get rid of a brand that they new would, long term, save them money not having it. There’s reasons they felt this way.
On the surface it looks like the French messed up.
Opel principally relies on the Family I series 3 enignes in both NA and turbo form, which are cast iron and were due to be replaced by the alloy SGE/MGE engines. An idiot could tell they wouldn’t comply with any new regulations, they barely scraped in to the current ones. Cast iron takes a while tio warm up, during which the fuel does not burn as well.
Buyer beware.
This the second European deal that GM has been fleeced by. First was Fiat that GM paid them to get out of a joint venture. Lets hope GM Management is a little smarter this time. The Dow up over 300 and GM is down.
The OPEL and GM drives are no worse than the PSA drives! The problem is that OPEL indicates real consumption. The Otto engines with intake manifold injection are cleaner than the direct injection of the competitors, but have an approximately 7% higher CO2 consumption. This is negative for the fairytale EU fleet consumption. The EU gives laws that they do not understand themselves! So what is PSA complaining about?
Important!!!
OPEL was sold to PSA because GM had to! For over 20 years, OPEL has had no state contracts in Germany and Europe as a foreign US company like the German and European manufacturers. Without government contracts, Audi, VW, BMW, Porsche and Mercedes would have been bankrupt for years. This also applies to PSA and Renault in France. Currently, only the China market is the only positive for the sale of the vehicles. The German and EU politicians negotiate daily with the Chinese government for new sales markets!
As is known, OPEL is not active as a brand in China! This market is missing OPEL, but no one knows when the China market has its END. China is a political dictatorship, but for the democratic states, MONEY is more important than decency!
What do you mean by “state contract”?
Does the equipment of the Hessen state police not qualify as “goverrnment contract”?
While Opel is foreign owned since 1929, it is perceived as a German brand and company. it is this perception which Tavares wanted to buy.
This is unoffcial, a Reuters story based on a word ftom their inside contact at PSA. PSA, GM and Opel have refused any comment.
While these Peugeot inside dope stories have proved to be true, this has to be taken with a grain of salt.