General Motors looks to sell loss-making Vauxhall and Opel

Potential purchase by owners of Peugeot and Citroën would create Europe’s second-largest carmaker

General Motors is in talks to sell its European arm Opel, which includes the UK’s Vauxhall, to the company behind Peugeot, after branding Brexit a “speed bump” that was slowing efforts to turn the loss-making division around.

GM and France’s PSA Group, which also owns Citroën, said they were discussing “numerous strategic initiatives ... including a potential acquisition of Opel”.

The admission prompted calls for GM to clarify the future of its Vauxhall plants in Luton and Ellesmere Port in Cheshire, which together employ around 4,500 staff.

Justin Madders, MP for Ellesmere Port and Neston, said: “We need to stress, if there are to be new owners, that we have very efficient operations over here in the UK.

“They’ve proved themselves to be excellent in comparison to other European plants.”

He stressed that if PSA buys Opel, it should not forget that the UK is the second-largest car market in Europe, but warned that whoever owns Vauxhall would need to be protected in Brexit negotiations.

“We want to get to a point where whatever deal is agreed is one that doesn’t introduce any barriers of tariffs to the car industry.”

In a letter to staff, GM offered few details but said it would “seek to ensure any transaction would serve the best interests of all our respective important stakeholders”.

It also urged staff not to let the possibility of a sale become a “distraction”.

GM, the world’s third-largest carmaker and the biggest in the US, has suffered more than $15bn of losses at Opel since 2000.

It nearly sold the division after going bankrupt in 2009 but reversed the decision in a bid to maintain a foothold in the potentially lucrative European market.

It had hoped to break even by now, but posted an annual loss of $257m (£206m) for 2016 earlier this month.

Chuck Stevens, GM’s chief financial officer, warned last year that the company was “prepared to take whatever action is necessary” to get its European business back on track.

GM described the UK referendum result as a “speed bump on our path to where we want to take the business” and warned that it would write down the value of GM Europe by $400m because of the fall in the value of the pound.

Talks over a sale are likely to reawaken concerns over the future of Opel’s UK operations, just four years after its Ellesmere Port plant came perilously close to closing.

GM kept the plant open only after Vince Cable, then business secretary, travelled to Detroit to agree a deal and reassure the firm about the government’s commitment to the industry.

But any change in the ownership of Opel could render the agreement worthless, particularly in the light of oversupply in the European car market.

Michelle Krebs, senior analyst at AutoTrader in the US, said: “I believe it’s still the case that there’s excess capacity in Europe so that’s an issue that’s been discussed for years.

“What happens to jobs, where will they be, those are questions to ask if this goes forward.”

She said the EU referendum result was likely to be a factor if GM pulls out of Europe altogether.

“GM, especially in light of Brexit, must look at its European operations and see the prospects are low [that] it will make a profit any time soon. So it’s not surprising they’re considering some moves.”

She said the talks could result in a strategic alliance similar to the tie-up between Renault and Nissan.

But if the two firms opt for a sale, the combined might of the Peugeot, Citroën and Opel brands would see PSA Group overtake Renault to become Europe’s second-largest car firm behind Volkswagen.

GM and PSA Group already cooperate on the production of minivans and SUVs but their partnership was diminished in 2013 when GM sold a 7% stake in the French firm for £250m.

In a statement on the company’s website, GM said: “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.”


Rob Davies and Graham Ruddick

The GuardianTramp

Related Content

Article image
Peugeot-Citroën chief vows to save jobs in Vauxhall/Opel takeover
PSA Group buys carmakers from General Motors for £1.9bn and wants to turn them around without plant closures or job cuts

Julia Kollewe

06, Mar, 2017 @12:35 PM

Opel to sever links with General Motors after 80 years

Move will mean Vauxhall, which represents General Motors in the UK, will be spun off from its US parent company

Kate Connolly in Berlin and Tim Webb

28, Feb, 2009 @12:01 AM

Article image
10,000 jobs still at risk despite General Motors decision on Vauxhall and Opel

The UK has been warned that restructuring at Vauxhall is still on the cards following GM's decision not to see its European operation

Terry Macalister

04, Nov, 2009 @9:18 PM

Article image
Merkel presses General Motors for decision on fate of Opel-Vauxhall
The German chancellor urges a swift conclusion over the carmaker takeover in a hope to save 25,000 jobs

Nick Mathiason and Tim Webb

23, Aug, 2009 @7:33 PM

Article image
General Motors promises 'fewer job cuts' at Vauxhall
Hopes raised for car workers at Ellesmere Port and Luton

Tim Webb

17, Nov, 2009 @8:06 PM

Germany calls General Motors to crisis talks on future of Opel/Vauxhall
Emergency talks as uncertainty surrounds future of Opel-Vauxhall

Richard Wray

24, Aug, 2009 @7:46 PM

Article image
Vauxhall job fears rise as Peugeot boss mentions 'speedy' savings
Just hours after talking with Theresa May the PSA chief says adding GM’s Opel and Vauxhall brands would create cost savings

Julia Kollewe

23, Feb, 2017 @3:45 PM

Article image
General Motors: if Saab bidders are not sound, we won't sell

GM chief tells Detroit motor show that any Saab buyer must be strong enough to survive at least 10 years, otherwise 'it's all going to come back to us'

Andrew Clark in Detroit

12, Jan, 2010 @11:59 PM

Article image
Renault-Fiat Chrysler merger collapses
French government blamed as €33bn deal to create world’s third-largest carmaker stalls

Julia Kollewe

06, Jun, 2019 @7:10 AM

Article image
Peugeot owner PSA close to deal to buy Vauxhall and Opel
Sale will trigger battle between French, German and UK governments to protect car plants and jobs in their countries

Graham Ruddick

04, Mar, 2017 @7:26 AM