General Motors unloaded its European operations with the sale of Opel and Vauxhall to France’s PSA Groupe for €1.3 billion, or $1.54 billion. However, a former General Motors Europe executive believes PSA made out in the deal after GM undervalued the brand.
Automotive News Europe reported on Tuesday that Nick Reilly, former GM Europe chief, said the French automaker got a “good deal” in the negotiations. Reilly led Opel and Vauxhall amid the Great Recession and helped stave off the brands’ collapses on the continent. He was also Opel’s former chairman.
“GM needed to get out, so they paid PSA quite a lot of money to get out,” he said, in reference to GM’s payment to PSA of €3 billion to settle all pension issues in the sale. GM’s cost to exit Europe will hover around $5 billion.
The retired GM executive also detailed PSA’s challenges with Opel and Vauxhall in the future and doesn’t see how all of GM’s former manufacturing plants will remain open. “I’m sure they will close plants. I’m sure they will reduce investment in new product programs,” he said. He also wondered how the brands will operate alongside each other since Peugeot, Citroen, Vauxhall and Opel all play in a similar segment. None of the brands are premium in nature.
“They’re right on top of each other in the market, middle of the road, neither premium nor entry, so the risk is they cannibalize themselves.”