Peugeot buys GM’s Opel division

Paris-based PSA Peugeot-Citroën has announced it has purchased General Motors’ Germany-based Opel division for €2.2 billion, a sum that represents about $2.3 billion.

The purchase makes PSA Europe’s second largest automaker behind Volkswagen.

Opel — and Vauxhall, its British sister division — were a burden for GM because the companies have lost money for 16 straight years. GM pulled the plug on Chevrolet’s European division two years ago in order to give Opel a much-needed boost, but the strategy didn’t yield the expected results.

With Chevrolet already gone, the sale marks the end of the General’s decades-long presence in Europe. However, GM points out it will continue to participate in Opel through its ownership of warrants to purchase PSA shares.

PSA believes it will return Opel to profitability by 2020 by slashing research and development costs and sharing components (such as platforms and powertrains) across its brands. That’s easier said than done, but company CEO Carlos Tavares has done a formidable job of bringing both Peugeot and Citroën back from the brink in just a few short years.

“We are confident that the Opel/Vauxhall turnaround will significantly accelerate with our support, while respecting the commitments made by GM to the Opel/Vauxhall employees,” affirmed Tavares in a statement published online.

Many Buick products — like the Cascada and the Regal — trace their roots to Opel’s headquarters in Rüsselheim, Germany, so the effects of the purchase will be felt well beyond Europe’s borders. GM confirmed that Opel’s new owner will honor existing supply agreements with Buick and Australia-based Holden.

That means the next Buick Regal and Holden Commodore will be, for all intents and purposes, French products. That could be the tip of the iceberg, because PSA has previously suggested it wants to use Opel to expand into markets like the United States where Peugeot and Citroën still suffer from a poor image.

Details about the non-compete clause GM reportedly wanted PSA to sign haven’t been made public yet. Stay tuned for more on this developing story.

Existing synergies
Opel and PSA began collaborating in March of 2012, when GM bought a seven percent stake in its French partner.

Some Peugeot-Citroën models are built by Opel, and vice versa. Additionally, the next Citroën C3 Picasso will share many components with the Opel Crossland X that’s debuting tomorrow at the Geneva Auto Show, and the new second-generation Opel Insignia will share its platform with the next Peugeot 508.