Cleveland, Ohio – General Motors (GM) is considering selling its European Vauxhall and Opel divisions to French automaker Peugeot Citroen (PSA Group), the latest in a nearly decade-long push to rid GM of its money-hemorrhaging business.
Factions within GM have been trying to exit Europe since the financial collapse of 2008. In 2009, then-GM CEO Fritz Henderson reached a multi-billion-dollar deal to sell the European brands to Canadian auto parts supplier Magna International. GM’s board of directors rejected that pact, saying it still saw too much value in the production, design, and engineering assets in Europe to make the deal worthwhile.
GM’s board at the time was made up almost entirely of people appointed by President Barack Obama’s auto bailout team. Henderson, a longtime GM executive, had taken the CEO position after Obama requested the resignation of his predecessor, Rick Wagoner.
The board’s rejection of the Opel/Magna deal, followed by collapses of Henderson-negotiated deals to sell the Saturn and Saab brands, led to Henderson’s dismissal at GM in late 2009. Ed Whitacre, one of the Obama-team-appointed board members, took over the CEO role and pledged to fix the European business.
GM has not made a profit in Europe since 1999 and has lost more than $8 billion since rejecting the Magna deal in 2009.
In statements Tuesday, but GM and PSA officials confirmed that they’re in talks that could include selling Opel/Vauxhall to PSA. GM and PSA have had a partnership to co-develop and produce vehicles since 2012, and the companies say they are looking to expand that corporate framework, including “exploring numerous strategic initiatives aiming at improving profitability and operational efficiency, including a potential acquisition of Opel Vauxhall by PSA. There can be no assurance that an agreement will be reached.”
Europe’s autos market has been challenging for many years. Sales growth has stagnated with low-priced competitors such as Hyundai and Volkswagen’s Skoda division taking up larger portions of the market. GM has been increasing Cadillac and Chevrolet sales in Europe, but Vauxhall and Opel have lost significant market share.
However, GM’s European design studios have played a big role in developing global vehicles, and GM has been blurring the lines between Buick and Opel for several years. The Buick Lacrosse and Cascada cars, for example, are identical to the Opel Insignia and Opel Cascada. The Buick Regal is a rebadged version of the Opel Insignia Grand Sport.
It’s unclear what would happen to the Buick cars if PSA takes over the brand. PSA could sell those vehicles back to GM for export to the U.S. under a long-term sales agreement, or Buick could drop the models. The Buick cars have been selling poorly for several months as buyers have turned to the brand’s sport utility vehicles and crossovers.
Source: General Motors, PSA Group