French PSA Group, the parent company of the Peugeot and Citroën car brands, is acquiring German carmaker Opel for 2.2 billion euros. PSA will also acquire the Vauxhall brand name. This will make PSA Group the second-largest car manufacturer in Europe.
To this end, PSA has reached an agreement with US General Motors (GM), Opel's parent company. The acquisition will give PSA control of 12 GM production sites. The production site in Turin, Italy, will remain owned by GM. In addition, around 40,000 GM employees will join PSA. Both the Opel and Vauxhall brand names will be owned by the French company.
Market share of 17%
Opel and Vauxhall achieved joint sales of $17.7 billion in 2016. By comparison, PSA Group recorded sales of 54 billion euros. By acquiring both car brands, PSA Group will become Europe's second-largest carmaker, with a 17% market share. The French company must leave only Volkswagen, which held a 23.9% market share in 2016, according to figures from European Automobile Manufacturers' Association (ACEA).
PSA Group expects the acquisition to generate substantial cost savings, mainly through economies of scale and the ability to jointly source, produce, research and develop. PSA Group expects this to generate annual cost savings of $1.7 billion from 2026 onwards. A significant part of these savings should already be realised by 2020.
Photo: Carlos Tavares (left), PSA Group chief executive officer, shakes hands with Mary Barra, chairman of the board and CEO of General Motors
Cooperation between PSA and GM
GM and PSA plan to collaborate on the development of electric technologies in the future. In addition, existing supply agreement for Australian car brand Holden and some models of US car brand Buick will continue. PSA also has the possibility of entering into a long-term agreement in the future to buy fuel cells from the joint venture of GM and Honda.
The acquisition is expected to be completed before the end of 2017.
By: Wouter Hoeffnagel
Photos: Opel
