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We didn’t see this one coming. It was never very clear why General Motors invested in Peugeot in 2012 and when it sold its shares two years later, most assumed that it was end of the alliance between the two companies. No-one expected the tables to be turned and for Peugeot to purchase GM’s Vauxhall and Opel operations.
On 6 March, it was announced that Peugeot, or more accurately, PSA, the group which includes Peugeot, Citroen and DS, had agreed to pay the equivalent of £1.9bn to acquire Vauxhall, Opel and GM’s European finance arm.
Was this a brilliant deal made by Carlos Tavares (pictured), the man who became the head of PSA after being fired by Nissan for saying that he wanted to be CEO of General Motors? Or a risky grandiose project, putting together two financially weak companies with overlapping model ranges?
Opinions were – and still are – divided. One school of thought is that merging car companies should have complementary products, so that the combined business joins them together to form one wider range. The other – as propounded by FCA chief Sergio Marchionne – is that the cars of the two companies should mirror one another, so that there can be major rationalisation of platforms and components.
That is Tavares’ strategy. Sooner or later, but certainly before 2026, nearly all Vauxhalls will be built on one of PSA’s three chassis platforms. PSA calculates that resulting economies of scale – in engineering, purchasing and manufacturing – will be worth £1.5bn a year. Analysts are sceptical about the chances of achieving this without plant closures and redundancies – hence the concern about the future of the plant at Ellesmere Port (which makes the Vauxhall Astra) and the van factory at Luton.
The chosen way to handle the merger, if not exactly good news for Vauxhall dealers, does at least promise stability in the short- and medium-term. Vauxhall (and Opel, its European counterpart) will continue to be run separately with a full line of products. It has to be like that if adding two and two together is going to make four and the expanded PSA Group is to maintain its new position as number two in Europe, behind VW.
And however you look at it, this is about size. Until the financial crisis in 2008 and its Chapter 11 bankruptcy, General Motors still saw itself on top of the world (even if it was having to fight off Toyota). Buying Vauxhall 92 years ago and Opel four years later, was part of this global master plan.
But now, with the grandees cleared out and a new hard-headed board of directors, there is a changed mindset in Detroit: improve the stock price and the return to shareholders by cutting unprofitable ventures. Opel/Vauxhall has been losing money for years – estimates range up
to $20bn (£15.9bn) since 2000 – and now, as well as selling it at a knock-down price, and topping up the GM Europe pension scheme, it has put aside another 4bn for withdrawal costs: it is really keen to get out. And it is not a coincidence that this plays well with President Trump’s America First campaign.
For Vauxhall dealers, the takeover, which will not be completed until the end of the year, will bring some changes in procedure. Tavares, who has achieved an impressive turnaround in PSA’s financial performance since he arrived in 2014, has strong views on marketing and pricing which he is sure to impart to the Opel-Vauxhall management.
Service departments will have to get used to a new component set and different technical systems. Fortunately, they have already seen the first examples: the new Crossland X and the forthcoming Grandland X, both of which are built on PSA platforms – a result of the stalled alliance made four years ago.
The big league: who owns what?
- Volkswagen: VW, Audi, Skoda, Seat, Porsche, Bentley, Lamborghini, Bugatti
- Toyota: Toyota, Lexus, Subaru, Daihatsu
- Renault-Nissan Alliance: Renault, Nissan, Infiniti, Mitsubishi, Dacia, Lada, Samsung, Alpine
- General Motors: Chevrolet, Cadillac, Buick, GMC
- Hyundai: Hyundai, Kia
- PSA: Peugeot, Citroen, DS, Opel, Vauxhall
- Ford: Ford, Lincoln
- FCA: Fiat, Alfa Romeo, Lancia, Abarth, Maserati, Chrysler, Jeep, Dodge, Ram
- Daimler: Mercedes-Benz, Smart, AMG
- BMW: BMW, Mini, Rolls-Royce
Tata: Jaguar, Land Rover, Tata
Geely: Volvo, Lynk & Co, London Taxi
Independent: Honda, Mazda, Suzuki
