The French owners of the Citroen and Peugeot brands have agreed to by General Motors’ unit in Europe.
Peugeot-Citroen In £1.9bn Deal To Buy Vauxhall
In a 2.2bn euro (£1.9bn) deal, the PSA Group, which owns Peugeot and Citroen, will purchase GM’s Vauxhall and Opel operations in Europe.
GM operations in Europe have not brought in profits since 1999.
This new deal has raised concerns that workers at Vauxhall will lose their jobs.
In the UK, the factories located in Luton and Ellesmere Port employ up to 4500 workers.
By acquiring Vauxhall and Opel, the French PSA Group will become the second largest automaker in Europe after Volkswagen.
Carlos Tavares, chairman of the PSA’s board insisted that the company was “confident that the Opel/Vauxhall turnaround will significantly grow with our support.”
He added that the PSA would continue to respect the “commitments made by GM to the Opel/Vauxhall employees."
In a statement, GM’s chief executive Mary Barra said it had been a difficult decision to sell Opel and Vauxhall.
Ms. Barra noted that business at GM would have broken even if the UK had decided not to exit the European Union, which has resulted in a sharp fall in the value of the pound.
In a joint deal with the BNP Paribas bank, the PSA will acquire GM’s financial operations in Europe for a total of 900m euros.
PSA had reassured stakeholders that it would return the Vauxhall and Opel brands to profitability. The deal is expected to bring in savings of up to £1.47bn year on year by 2026.
Following joint talks between the two companies, they have also been in consultation with union officials and ministers to address any fears of job cuts.
Both companies employed an estimated 4,500 workers.
According to Len McCluskey, the general secretary of the Unite union, talks with the PSA have been generally progressive but said that the main of aim of the union was to ensure a “long-term future for our plants and the workers depending on them.”
He added, “We will also be urging the government to continue negotiations in order to offer full support to workers in the auto industry during this unsettling time.”
Vauxhall’s supply chain employs even more workers.
Market observers say it is very likely that people will lose their jobs given that PSA was working above capacity in many of its plants across Europe.
Prof Peter Wells of Cardiff Business School noted, "Carlos Tavares has to achieve savings of $2bn per year so something has got to give," he said.
He added, "PSA will be coming on board to such a big mess and they have to make something worthwhile out of this.”