The PSA Group, owner of Citroen and Peugeot has officially announced it is buying Opel and Vauxhall, from General Motors as part of a deal worth 2.3 billion Euros (approx Rs 15,000 crore). The agreement between the American giant and French carmaker includes the Opel/Vauxhall brand subsidiary worth 1.3 billion Euros and GM Financial’s European operations valuing 0.9 billion Euros.
This acquisition makes PSA Group second largest car manufacturer in Europe, behind Volkswagen Group; with a market share of 17 per cent. According to the agreement, the possession of Opel’s, and its British subsidiary Vauxhall’s automotive operation, six assembly and component manufacturing facilities, an engineering centre in Russelsheim, and around 40,000 GM employees will move under PSA’s ownership. The engineering facility in Torino will be retained by GM, though.
However, Opel’s product will continue to use the technologies until PSA can wholly develop the acquired brand. This means that current model range will have to wait until the end of their life-cycle to move onto PSA platform whereas the new cars like Crossland X and Grandland X will be the first to be based on PSA’s architecture. The association will also help both the firms with the electric technologies with the added benefit of GM-Honda joint venture, whereas the existing supply of Holden and Buick models will continue.
Opel has been under GM banner for a long time now and was always facing financial turmoils. According to PSA, the acquisition will ‘turnaround the company’, as it expects an annual saving of 1.7 billion Euros by 2026, of which a significant part is expected to be delivered by 2020. PSA expects Opel/Vauxhall to reach a recurring operating margin of 2 per cent by 2020 and 6 per cent by 2026, and to generate a positive operational free cash flow by 2020.
PSA Group is set to make a re-entry in India through a joint venture with C.K. Birla Group. It intends to manufacture one lakh units a year, with the operations to commence by 2020.
