Why GM is selling Opel to PSA
Skip to main content
Sister Publication Links
  • Automotive News Canada
  • Automotive News Europe
  • Automotive News China
  • Automobilwoche
AN-LOGO-BLUE
Subscribe
  • Subscribe
  • Account
  • login
  • HOME
  • NEWS
    • Dealers
    • Automakers & Suppliers
    • News by Brand
    • Cars & Concepts
    • Coronavirus Coverage
    • China
    • Shift
    • Mobility Report
    • Special Reports
    • Digital Edition Archive
    • This Week's Issue
    • VW badges rtrs web.jpg
      VW Group operating profit drops by half in 2020
      Washington Auto Show postponed amid ongoing COVID-19 pandemic
      Subaru expands Feeding America donation, advertising
      Mass. dealership group to pay $1 million in unemployment scheme settlement
    • Audi to build EVs at new company majority owned by VW Group
      European Chamber rules out American, European export curbs as cause of chip shortage
      Used-vehicle market posts first contraction in 2020
      Tight chip supplies could persist for as long as a decade
    • Detroit Aerial Panorama during sunset
      Developing future workers to fuel growth in mobility
      Getting around in Las Vegas often involves long waits for a crowded monorail ride, below, or taking escalators up and down to cross elevated pedestrian walkways along the Strip.
      Las Vegas offers best and worst in transportation challenges
      Where is transportation headed?
      In pandemic environment, RV industry ‘roaring back'
    • Crashes involving electric vehicles, such as that of a Tesla Model X in California in 2018, pose battery-fire concerns for first responders.
      NTSB says automakers need to better arm emergency responders
      An EVgo electric vehicle charging station
      Charging network EVgo near merger to go public, report says
      The Cruise AV autonomous vehicle, based on the Chevy Bolt
      Honda taps GM's Cruise to bring new mobility to Japan
      Aurora teams with PACCAR on self-driving truck development
    • Elon Musk interview
      Tesla’s Model Y, on sale since March, is a showcase of EV technologies competitors will benchmark.
      Technologies of Electrification
      Cadillac’s Lyriq EV will be unveiled Aug. 6.
      Future Product Pipeline
      A CALL TO ACTION
    • GM, Unifor go from strife to ‘right solutions’
      Crashes involving electric vehicles, such as that of a Tesla Model X in California in 2018, pose battery-fire concerns for first responders.
      NTSB says automakers need to better arm emergency responders
      The Toyota C+Pod’s interior has a stripped-down, minimalistic feel, with big knobs and buttons.
      EV design for Japan's tight turns
      Genesis' delayed relaunch back on track with new crossovers, upcoming EV
    • Access F&I
    • Fixed Ops Journal
    • Marketing
    • Used Cars
    • Retail Technology
    • Sales
    • Best Practices
    • Dealership Buy/Sell
    • NADA
    • NADA Show
    • Automakers
    • Manufacturing
    • Suppliers
    • Regulations & Safety
    • Executives
    • Talk From The Top
    • Leading Women Network
    • Guide to Economic Development
    • PACE Awards
    • Management Briefing Seminars
    • World Congress
    • Aston Martin
    • BMW
      • Mini
      • Rolls-Royce
    • Daimler
      • Mercedes Benz
      • Smart
    • Fiat Chrysler
      • Alfa Romeo
      • Chrysler
      • Dodge
      • Ferrari
      • Fiat
      • Jeep
      • Maserati
      • Ram
    • Ford
      • Lincoln
    • General Motors
      • Buick
      • Cadillac
      • Chevrolet
      • GMC
      • Holden
    • Honda
      • Acura
    • Hyundai
      • Genesis
      • Kia
    • Mazda
    • McLaren
    • Mitsubishi
    • Nissan
      • Infiniti
    • PSA
      • Citroen
      • Opel
      • Peugeot
    • Renault
    • Subaru
    • Suzuki
    • Tata
      • Jaguar
      • Land Rover
    • Tesla
    • Toyota
      • Lexus
    • Volkswagen
      • Audi
      • Bentley
      • Bugatti
      • Lamborghini
      • Porsche
      • Seat
      • Skoda
    • Volvo
    • (Discontinued Brands)
    • Virtual reveals (Sponsored)
      • GENESIS: 2021 GV80
      • KIA: 2021 K5
      • LEXUS: 2021 IS
      • NISSAN: 2021 Rogue
      • TOYOTA: 2021 Venza and 2021 Sienna
    • Auto Shows
      • Detroit Auto Show
      • New York Auto Show
      • Los Angeles Auto Show
      • Chicago Auto Show
      • Geneva Auto Show
      • Paris Auto Show
      • Frankfurt Auto Show
      • Toronto Auto Show
      • Tokyo Auto Show
      • Shanghai Auto Show
      • Beijing Auto Show
    • Future Product Pipeline
    • Photo Galleries
    • Car Cutaways
    • Design
  • OPINION
    • Blogs
    • Cartoons
    • Keith Crain
    • Automotive Views with Jason Stein
    • Columnists
    • China Commentary
    • Editorials
    • Letters to the Editor
    • Send us a Letter
    • Nikon turns lens on auto factory, build quality
      Bosch_information_domain_computer web.jpg
      Bosch, Continental battle to supply the brain of the connected car
      A victory lap for Detroit car design
      Stellantis_logo_blue_background web.jpg
      In 'merger of equals,' PSA is buying FCA, Stellantis prospectus says
    • view gallery
      1 photos
      A New GM
      view gallery
      1 photos
      The Bridge
      view gallery
      12 photos
      Leo Michael's best of 2020
      view gallery
      1 photos
      UAW Deal
    • Shifting gears away from the stick shift
      SEMA still a wonderful circus
      Penske still has plenty of races to win
      Ford's turn in the hot seat
    • January 19, 2021 | Small car part causes big problem
      January 12, 2021 | Automotive industry shined in 2020
      December 8, 2020 | In a year that lacked luster, All-Stars showed how to shine
      November 24, 2020 | Female talent in automotive is expanding
    • Dan Shine
      Don't totally ‘forget about 2020'
      Jamie Butters
      Big auto show era truly over
      John Possumato
      Missing piece to the mobility puzzle: Helping carless people
      Dave Versical
      Female CMO is new norm
    • How Tesla, GM transformed EV market in 2020
      Is sales recovery nearing an end?
      Beijing's uphill battle to boost EV sales
      Nasdaq-like Star Board poised to become key finance platform
    • EV charging
      Time for U.S. to embrace the EV
      Ford's ‘Finish Strong' ad sets right tone for '21
      UAW settlement brings justice, voting rights
      Dealers should be treated as partners in EVs
    • Is banning ICEs in our best interests?
      GM should share EV risk with dealers
      From Toyota store to hydrogen highway
      Ready to buy Mirai, but where to fuel?
  • DATA CENTER
  • VIDEO
    • AutoNews Now
    • First Shift
    • Special Video Reports
    • Weekend Drive
    • AutoNews Now: Tavares to have 38 direct reports at Stellantis
      AutoNews Now: VW to take 'radical, new approach' with flagship electric sedan
      AutoNews Now: Biden to revisit fuel efficiency rules
      AutoNews Now: Tavares: Stellantis needs to be 'great rather than big'
    • First Shift: Ford prices Takata recall at $610M
      First Shift: Honda to test Cruise AV in Japan
      First Shift: Trump pardons former Google self-driving engineer Levandowski
      First Shift: GM's surprise path to building electric delivery vans in Canada
    • N.J. dealer helps position peers for ‘electric revolution’
      DCH Millburn Audi
      'Finding the diamond in the rough': How 2020's No. 1 dealership retains talent
      Don Johnson Motors
      'Distinctive culture' cuts turnover, carves career paths at Wis. dealership group
      Why 2020 could be a record year for buy-sells
    • Why the pickup is the auto industry's 'battleground'
      Carlos Ghosn's quest to restore his reputation
      Why Ford must execute to avoid 'deep trouble'
      Why Honda is 'locked and loaded' for 2020
  • EVENTS & AWARDS
    • Events
    • Awards
    • Congress Conversations
    • Retail Forum: NADA
    • Canada Congress
    • Europe Congress Conversations
    • Leading Women Conference
    • Fixed Ops Journal Forum
    • ANE Shift
    • Shift: Mobility at a Crossroads
    • Shift: The Future of Mobility (CES)
    • 100 Leading Women
    • 40 Under 40 Retail
    • All-Stars
    • Best Dealerships To Work For
    • PACE Program
    • Rising Stars
    • Europe Rising Stars
  • JOBS
  • AN Solutions
  • +MORE
    • Leading Women Network
    • Podcasts
    • Webinars
    • In the Driver's Seat
    • Publishing Partners
    • Classifieds
    • Companies on the Move
    • People on the Move
    • Newsletters
    • Contact Us
    • Media Kit
    • RSS Feeds
    • Shift: A Podcast About Mobility
    • Special Reports Podcasts
    • Daily Drive Podcasts
    • AAM
    • Gentex
    • Reputation.com
    • Ricardo
    • Ricardo
    • Allstate: Want more from your F&I?
    • Ally: Navigating the future of automotive retailing
    • Amazon Web Services: Any place, any time, any channel
    • Amazon Web Services: The power of the cloud
    • Amazon Web Services: Universal translator: Harnessing sensor data to build better automotive software
    • Epic Games: Transforming the auto industry with digital assets
    • FTI Consulting: Crisis as a catalyst for change
    • Google: 5 trends shaping the auto industry's approach to a new normal
    • IHS Markit: Automotive loyalty in the wake of the COVID-19 recession
    • IHS Markit: Autonomous vehicles: Automotive and transportation disruption
    • IHS Markit: COVID-19: The future mobility delusion
    • IHS Markit: The battery electric vehicle (BEV)
    • Level5: 2020 Automotive E-Commerce Report
    • Naked Lime: Bring social reputation together as part of big-picture marketing
    • Wells Fargo Auto: Switching gears from LIBOR to SOFR
    • Ally: Do It Right
    • DealerSocket
    • Deloitte: Cyber everywhere: Preparing for automotive safety in the face of cyber threats
    • Facebook: The road to a zero-friction future
    • Guide To Economic Development
    • PayPal Credit: How consumer financing helps drive sales for online auto parts retailers
MENU
Breadcrumb
  1. Home
  2. Automakers & Suppliers
March 06, 2017 12:00 AM

Why GM is selling Opel to PSA

Ammann says business profile will improve 'immediately'

Nick Bunkley
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    PHOTOS01_306009998_PH_1_UTOKSDQTPQLF.jpg

    Share
    GM
    PSA finance chief Jean-Baptiste de Chatillon, PSA CEO Carlos Tavares, GM CEO Mary Barra, Opel CEO Karl-Thomas Neumann and GM President Dan Ammann at the press conference on Monday, March 6.

    PHOTOS01_306009998_PH_2_BFBUZEBYCOIU.jpg

    Share
    GM
    Tavares and Barra shake hands at Monday's announcement.

    GM.jpg

    Share
    GM
    Tavares, Barra and Neumann at Monday's press conference. Neumann will remain head of Opel following the acquisition.

    PHOTOS01_306009998_PH_5_DVPCKIFIFLAT.jpg

    Share
    BLOOMBERG
    Tavares speaks with Barra.

    PHOTOS01_306009998_PH_7_AUTHQVQLCXNQ.jpg

    Share
    BLOOMBERG
    Barra, Tavares and Neumann answer questions at Monday's press conference.

    PHOTOS01_306009998_PH_9_KRNRPTTGWADY.jpg

    Share
    BLOOMBERG
    Tavares, left, speaks as Neumann, listens.

    PHOTOS01_306009998_PH_6_FCLWLICJQXVZ.jpg

    Share
    BLOOMBERG
    Barra, Tavares and Neumann walk off the stage following Monday's press conference, which began at about 9:15 a.m. local time.

    PHOTOS01_306009998_PH_8_MYMAQZTGIMLT.jpg

    Share
    BLOOMBERG
    Tavares and Barra field questions from the European media.

    General Motors executives said they decided to sell Opel because Europe’s changing geo-political and regulatory climate demands more investment at a time when they see a greater need to focus on North America, China and emerging technologies such as autonomous vehicles.

    The $2.3 billion deal with PSA Group of France will not only free up GM resources for more lucrative opportunities, but it also will give the automaker a greater ability to return cash to shareholders in a continuing bid to raise its stock price.

    “By immediately improving General Motors’ overall business profile, the transaction will enable us to increase our returns to shareholders,” GM President Dan Ammann said at a news conference Monday in Paris.

    “Just as importantly, we will be able to more sharply focus our time and resources on higher-growth, higher-return investments in our core automotive business and in new technologies that are transforming our industry.”

    Ammann said the European automotive market has become so different from GM’s other major regions that only 20 percent of the vehicles in Opel’s future portfolio would have been shared with the rest of GM. That means a company such as PSA is in a better position to provide the necessary scale, he explained.

    GM shares fell 0.8 percent to close at $37.91 on Monday. 

    'Industrial logic'

    Ammann and PSA Chairman Carlos Tavares repeatedly spoke of the “industrial logic” behind combining of PSA and Opel. For GM, the upside is no longer having to pour money into a region where the benefits to the rest of the company’s operations are diminishing.

    “We believe this is the beginning of a new era of achievement for Opel/Vauxhall,” GM CEO Mary Barra said, “as well as a bold and fundamental commitment to GM’s own future of profitable growth and success.”

    The sale, expected to close by the end of the year, comes as Opel was close to finally making money again after nearly two decades of losses. But the profit opportunity GM saw in Europe is far less than what it already is generating elsewhere, particularly in the U.S.

    PSA said it expects Opel to produce operating margins of 2 percent by 2020 and 6 percent by 2026. That compares to GM’s margins of more than 10 percent in North America for the past two years. The company has projected it will achieve that target again in 2017.

    Share repurchase

    GM said the deal will free up $2 billion in cash to use toward repurchasing its own shares. The company is in the midst of a buyback program that it recently expanded to a goal of $14 billion.

    At the same time, GM said it will have to take a primarily non-cash special charge of $4 billion to $4.5 billion in connection with the sale. GM said it will pay PSA 3 billion euros ($3.18 billion) to settle transferred pension obligations.

    Ammann said the agreement limits the sale of Opel and Vauxhall vehicles to the markets where they are currently on sale as long as they remain on GM architectures. Once PSA migrates those vehicles to its own platforms and technology, it will be free to sell them anywhere in the world.

    Opel’s engineering operations in Germany will move to PSA as part of the deal, but GM will retain an engineering center in Torino, Italy. That center will continue to be the global epicenter for GM’s work on diesel engines, Ammann said.

    GM recently updated many of its car platforms through Opel, so the company has time to shift that development work to other locations before the next major overhauls are needed, he said.

    “We expect those architectures to carry us far into the future,” Ammann said. 

    After the transaction closes, GM’s presence in Europe will be reduced to several low-volume vehicle lines, with no plans to regain a larger foothold “in the foreseeable future,” Ammann said. GM will continue to sell Cadillacs and the Chevrolet Camaro and Corvette in Europe.

    “The mass-market opportunity in Europe is no longer compelling,” Ammann told analysts on a conference call this morning.

    GM is not barred from offering car-sharing and other mobility services in Europe. Barra said GM can successfully tap into the market using the “transformative technologies” it is developing, even without a manufacturing presence there, and may do so “either in partnership or another arrangement.”

    GM said Opel will continue to provide some vehicles for its Buick brand and for its Holden unit in Australia. GM and PSA, which have collaborated on some vehicle development since 2012, said they also will work together on electric-vehicle technology.

    Last year’s vote by the United Kingdom to leave the European Union clearly played a role in GM’s decision. During today’s news conference, Barra was asked if Donald Trump’s election as U.S. president was a factor, given his emphasis on reducing imports and proposal to tax vehicles that are brought into the country. Barra said only that the “changing landscape” in Europe and other parts of the world led to the agreement.

    “This was really a carefully thought-out plan,” she said, “building on the success and the win-win opportunity that we saw because of our work with PSA in the last four years.”

    RECOMMENDED FOR YOU
    EV design for Japan's tight turns
    Related Articles
    GM's relationship with Opel grew turbulent through the years
    PSA's purchase of Opel would bring challenges and benefits
    Tavares is a maestro who wants to orchestrate Opel's revival
    For engineering, the good and the bad of GM's move to unload Opel
    Tavares wins favorable terms with Opel takeover
    GM will keep Cadillac in Europe
    Opel CEO Neumann will remain in post after PSA takeover
    Timeline: A look at Opel from sewing machines to bicycles to cars to PSA
    GM agrees to sell Opel, Vauxhall to PSA
    Will purchase of Opel mean deja vu for PSA?
    GM will keep Cadillac in Europe
    The GM-PSA deal at a glance
    The incredible shrinking GM
    GM shifts from bigger is better to less global, more profitable
    GM agrees to sell Opel, Vauxhall to PSA
    GM shifts from bigger is better to less global, more profitable
    New Opel Corsa delayed as PSA pushes technical convergence
    Opel cars through the years
    GM-PSA press conference
    Letter
    to the
    Editor

     

     

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    EV design for Japan's tight turns
    EV design for Japan's tight turns
    VW Group operating profit drops by half in 2020
    VW Group operating profit drops by half in 2020
    Rivian raises $2.65 billion in latest round of funding
    Rivian raises $2.65 billion in latest round of funding
    The power of the cloud
    Sponsored Content: The power of the cloud
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    See more newsletter options at autonews.com/newsletters.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Digital Edition
    Automotive News 1-18-21
    THIS WEEK'S EDITION
    See our archive
    Fixed Ops Journal
    Fixed Ops Journal 12-14-20
    Read the issue
    See our archive
    BREAKING NEWS ALERTS: Sign up and be the first to know when big news breaks.
    WEEKLY NEWSLETTER: Sign up to start your week with the top stories from the latest issue of Automotive News, delivered to your inbox first thing each Monday morning.
    Get Free Newsletters

    Sign up and get the best of Automotive News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today

    Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.

    Subscribe Now
    Connect With Us
    • Facebook
    • Instagram
    • LinkedIn
    • Twitter

    Our mission

    The Automotive News mission is to be the primary source of industry news, data and understanding for the industry's decision-makers interested in North America.

    AN-LOGO-BLUE
    Contact Us

    1155 Gratiot Avenue
    Detroit, Michigan
    48207-2997

    (877) 812-1584

    Email us

    Automotive News
    ISSN 0005-1551 (print)
    ISSN 1557-7686 (online)

    Fixed Ops Journal
    ISSN 2576-1064 (print)
    ISSN 2576-1072 (online)

    Resources
    • About us
    • Contact Us
    • Media Kit
    • Subscribe
    • Manage your account
    • Reprints
    • Ad Choices Ad Choices
    • Sitemap
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • HOME
    • NEWS
      • Dealers
        • Access F&I
        • Fixed Ops Journal
        • Marketing
        • Used Cars
        • Retail Technology
        • Sales
        • Best Practices
        • Dealership Buy/Sell
        • NADA
        • NADA Show
      • Automakers & Suppliers
        • Automakers
        • Manufacturing
        • Suppliers
        • Regulations & Safety
        • Executives
        • Talk From The Top
        • Leading Women Network
        • Guide to Economic Development
        • PACE Awards
        • Management Briefing Seminars
        • World Congress
      • News by Brand
        • Aston Martin
        • BMW
          • Mini
          • Rolls-Royce
        • Daimler
          • Mercedes Benz
          • Smart
        • Fiat Chrysler
          • Alfa Romeo
          • Chrysler
          • Dodge
          • Ferrari
          • Fiat
          • Jeep
          • Maserati
          • Ram
        • Ford
          • Lincoln
        • General Motors
          • Buick
          • Cadillac
          • Chevrolet
          • GMC
          • Holden
        • Honda
          • Acura
        • Hyundai
          • Genesis
          • Kia
        • Mazda
        • McLaren
        • Mitsubishi
        • Nissan
          • Infiniti
        • PSA
          • Citroen
          • Opel
          • Peugeot
        • Renault
        • Subaru
        • Suzuki
        • Tata
          • Jaguar
          • Land Rover
        • Tesla
        • Toyota
          • Lexus
        • Volkswagen
          • Audi
          • Bentley
          • Bugatti
          • Lamborghini
          • Porsche
          • Seat
          • Skoda
        • Volvo
        • (Discontinued Brands)
      • Cars & Concepts
        • Virtual reveals (Sponsored)
          • GENESIS: 2021 GV80
          • KIA: 2021 K5
          • LEXUS: 2021 IS
          • NISSAN: 2021 Rogue
          • TOYOTA: 2021 Venza and 2021 Sienna
        • Auto Shows
          • Detroit Auto Show
          • New York Auto Show
          • Los Angeles Auto Show
          • Chicago Auto Show
          • Geneva Auto Show
          • Paris Auto Show
          • Frankfurt Auto Show
          • Toronto Auto Show
          • Tokyo Auto Show
          • Shanghai Auto Show
          • Beijing Auto Show
        • Future Product Pipeline
        • Photo Galleries
        • Car Cutaways
        • Design
      • Coronavirus Coverage
      • China
      • Shift
      • Mobility Report
      • Special Reports
      • Digital Edition Archive
      • This Week's Issue
    • OPINION
      • Blogs
      • Cartoons
      • Keith Crain
      • Automotive Views with Jason Stein
      • Columnists
      • China Commentary
      • Editorials
      • Letters to the Editor
      • Send us a Letter
    • DATA CENTER
    • VIDEO
      • AutoNews Now
      • First Shift
      • Special Video Reports
      • Weekend Drive
    • EVENTS & AWARDS
      • Events
        • Congress Conversations
        • Retail Forum: NADA
        • Canada Congress
        • Europe Congress Conversations
        • Leading Women Conference
        • Fixed Ops Journal Forum
        • ANE Shift
        • Shift: Mobility at a Crossroads
        • Shift: The Future of Mobility (CES)
      • Awards
        • 100 Leading Women
        • 40 Under 40 Retail
        • All-Stars
        • Best Dealerships To Work For
        • PACE Program
        • Rising Stars
        • Europe Rising Stars
    • JOBS
    • AN Solutions
    • +MORE
      • Leading Women Network
      • Podcasts
        • Shift: A Podcast About Mobility
        • Special Reports Podcasts
        • Daily Drive Podcasts
      • Webinars
      • In the Driver's Seat
        • AAM
        • Gentex
        • Reputation.com
        • Ricardo
        • Ricardo
      • Publishing Partners
        • Allstate: Want more from your F&I?
        • Ally: Navigating the future of automotive retailing
        • Amazon Web Services: Any place, any time, any channel
        • Amazon Web Services: The power of the cloud
        • Amazon Web Services: Universal translator: Harnessing sensor data to build better automotive software
        • Epic Games: Transforming the auto industry with digital assets
        • FTI Consulting: Crisis as a catalyst for change
        • Google: 5 trends shaping the auto industry's approach to a new normal
        • IHS Markit: Automotive loyalty in the wake of the COVID-19 recession
        • IHS Markit: Autonomous vehicles: Automotive and transportation disruption
        • IHS Markit: COVID-19: The future mobility delusion
        • IHS Markit: The battery electric vehicle (BEV)
        • Level5: 2020 Automotive E-Commerce Report
        • Naked Lime: Bring social reputation together as part of big-picture marketing
        • Wells Fargo Auto: Switching gears from LIBOR to SOFR
        • Ally: Do It Right
        • DealerSocket
        • Deloitte: Cyber everywhere: Preparing for automotive safety in the face of cyber threats
        • Facebook: The road to a zero-friction future
        • Guide To Economic Development
        • PayPal Credit: How consumer financing helps drive sales for online auto parts retailers
      • Classifieds
      • Companies on the Move
      • People on the Move
      • Newsletters
      • Contact Us
      • Media Kit
      • RSS Feeds