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.
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Curious to see if GM can maintain Japanese like quality without Russelheim.
I’d hate to see GM go back to the bottom next to Ford in rankings. One has to wonder what this means for Buick, too.
Yes they can nearly all the GM sites were intergrated and worked up in the same ways with other sites.
GM to work as a hand with independent fingers but today they work as a hand that the fingers work together.
If anything they will have more money to put into development that was being lost in Europe.
Where are all the people in this thread that though selling Ppel was a bad idea now?
Scott-I still think it was a terrible idea. Look to Ford as to turning a European profit.
Ford looked ahead, reduced its footprint by reducing capacity. Opel just now getting proper SUVs was a problem, too.
GM may fear EU emissions and fuel economy standards but those will be a global norm and even in the US once the Dems retake the White House.
GM is finally mpg competitive with the top global brands. Evidently this won’t last very long given the high cost was a reason for the Opel sale.
It’s impossible to overstate the impact that the absence of a class-competitive range of SUVs had upon GM’s performance in Europe. Until this year, the only class competitive offering GM offered in Europe was the Opel / Vauxhall Mokka.
Last year alone the Mokka sold 165k units in the UK and Europe – its best ever year for unit sales. And that’s after some 5 years in production, blowing the Ford EcoSport and many other rival offerings clean out of the water. It’s only now that a mid-size (in European terms) SUV has appeared in the guise of the Grandland X and a larger SUV is at least 18 months – 2 years away. And even then that mid-size SUV will be manufactured by PSA and use PSA engines.
Just think of the difference to sales and profit, if GM Europe had offered competitive products in the classes above.
Ford’s product planners could clearly see the SUV boom – hence the Kuga. So too could Kia and Hyundai, whose SUV range helped transform both brands from fringe players to major contended in the UK and EU. So too could Nissan with the Juke, Qashqai (or should that be Cashcow?!) and X-Trail… as well as countless other manufacturers. Sure there was the Antara… but let’s face it, Bupyeong’s finest was so far off the pace it never really mattered.
Meantime as the SUV market boomed, the Opel Group subsidiary of the world’s largest manufacturer of SUVs sat on the sidelines and instead developed a concept car they couldn’t build (Opel GT), printed calendars with countless photographs of grumpy cats and developed an in-car fragrance dispenser… you couldn’t make it up!
Steve 1 – you make a very valid point, reference fuel consumption competitiveness. Living in the UK, I’ve no idea about the likelihood or otherwise of Democrats retaking The White House. But aside from regulatory demand for reduced fuel consumption, there surely is increasing consumer demand worldwide.
At the moment, I’m in the process of replacing my 1.8 litre petrol Vauxhall Insignia, simply because I don’t want to spend £320 (US$420) a month on petrol. It’s replacement? More than likely a 1.6CDTi Ecoflex Vauxhall Astra Sports Tourer, which would reduce my fuel bill each month by around £140 (US$180) without sacrificing very much in the way of space or practicality. That’s a saving of US$8,800 over the next 4 years on fuel alone!
I suspect I’m far from alone.
“Before PSA was in on any sort of deal, Opel management pointed the blame at Brexit…”
All of which kinda ignores the point that in its last set of accounts, GM Vauxhall actually turned a profit, unlike its loss-making Opel Group parent.