Theresa May to meet PSA chief in bid to protect Vauxhall in takeover

Published: 18 February 2017

► PSA and GM in merger discussions
► Peugeot-Citroen may acquire Opel/Vauxhall
► Prime minister May to meet PSA boss Tavares

British prime minister Theresa May is due to meet meeting PSA chief Carlos Tavares in a bid to secure Vauxhall's manufacturing footprint in the UK in the wake of the likely takeover of GM's European operations by Peugeot Citroen.

Parent company PSA has announced it's in advanced talks to buy Opel/Vauxhall. As two high-volume, mainstream car makers, they suffer from over-capacity, leading to worries about job losses and factory closures.

It emerged on Saturday that May would be meeting Tavares (below), the head of Peugeot Citroen, as the Government steps up moves to protect Vauxhall's long-term future as a UK manufacturer.

Carlos Tavares (left): masterminding the proposed takeover of Vauxhall/Opel

Business minister Greg Clark met with his French counterpart, industry minister Christophe Sirugue, within days of the announcement in 'constructive talks' to safeguard the 4500 staff GM Europe directly employs in the UK.

'There is some way to go in discussions between GM and PSA, but I was reassured by GM's intention, communicated to me, to build on the success of these operations rather than rationalise them,' Clark told BBC News.

Recent developments

Here we round up the latest developments of the GM-PSA takeover deal:

  • Unite union says it has received 'no assurances' over UK jobs
  • Vauxhall says it employs 23,000 in UK dealer network
  • Further 7000 in the British supply chain
  • German minister Malu Dreyer says 'there are signals that... no plants in Germany will be closed'
  • GM Europe has lost more than $15 billion in Europe since 2000

Analysis: why GM and PSA have been strategic partners since 2012

How the Opel/Vauxhall takeover story broke

It was an unexpected bit of automotive matchmaking on Valentine’s Day 2017: General Motors (GM) confirmed it was advanced discussions to sell the Opel and Vauxhall brands to Peugeot-Citroen’s PSA Group parent company.

Luton factory: at risk in a GM-PSA restructure, should the sale go ahead

A statement issued on 14 February 2017 by GM and the PSA Group confirmed the talks:

‘Since 2012, General Motors and PSA Group have been implementing an alliance covering, to date, three projects in Europe and generating substantial synergies for the two groups.  Within this framework, General Motors and PSA Group regularly examine additional expansion and cooperation possibilities, as well. PSA Group and General Motors confirm they are 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.’

What's in it for both parties?

Should PSA take a majority stake in Opel and Vauxhall, together with other branches of GM’s European operations, it would become a manufacturer with a total share of some 16% of the European market. The VW Group, currently Europe’s largest automotive group, had a share of around 21% in 2016.

Opel is currently a loss-making enterprise; GM's European operations, of which Opel/Vauxhall is an integral component, posted a loss of $287m in 2016, Automotive News Europe reports, down from a somewhat scarier $813m in 2015. 

Two of Europe's largest car making dynasties are coming together: PSA in bid to buy Opel/Vauxhall

GM has previously held a stake in PSA, which was sold in 2013. The French government took a 14% stake in PSA in 2014, and China's Dongfeng a further 14%, since when the previously financially troubled Peugeot-Citroen has returned to profit.

Existing technical partnership

General Motors and PSA have an existing platform-share collaboration for commercial vehicles and certain SUV/crossover passenger cars. The upcoming Opel/Vauxhall Grandland X is twinned with the Peugeot 3008, for example.

GM has been in advanced stages of a sale of Opel once before, until an eleventh-hour board meeting called off a deal with Canadian automotive parts manufacturer Magna International in 2009.

What happens to Vauxhall’s Ellesmere Port plant if PSA buys Opel?

Speaking to CAR on 13 February 2017, Peugeot-Citroen CEO Carlos Tavares said this on doing business in Brexit-bound Britain:

'So far nothing has changed, except for the pound. The good thing is I have no plants in the UK. Everything is continental.'

That’s not the case for GM, which manufactures the current-generation Astra at its Cheshire factory. Looming Brexit has thrown a massive spanner in the works of GM Europe’s turnaround plan, and it’s bound to have influenced the discussions with PSA.

The Ellesmere Port problem could end-up in Carlos Tavares’ in-tray – should PSA conclude the deal for Opel/Vauxhall.

A deal is expected by early March 2017. We could see a very different industrial landscape by the Geneva motor show...  

 

Vauxhall Peugeot

By James Taylor

CAR's new online editor, fast-lapper, newshound, champ

  • Vauxhall: for sale - with PSA primed to take over
  • Luton factory: at risk in a PSA-GM restructure (Getty)
  • Carlos Tavares (left): masterminding takeover of Vauxhall/Opel