General Motors has constantly been failing to generate profits from its European brands.
The European Commission has said that it has ‘unconditionally approved’ French automaker Groupe PSA’s move to buy General Motors’ (GM) European divisions – Opel and Vauxhall.
PSA, which consists of three car brands – Peugeot, Citroen and DS Automobiles, agreed to buy GM’s Euro divisions in March 2017 for a sum of £1.9 billion (approx. Rs. 16,000 crore). After the takeover, PSA will become Europe’s second largest automaker, after Volkswagen.
The European Commission has confirmed that this transaction would raise no competition concerns. It’s statement said, “The Commission investigation showed that the merged entity will still face strong competition from manufacturers such as Renault, Volkswagen, Daimler, Ford, Fiat and various Asian competitors.”
Presently, Opel has its presence in most major European markets, save for the UK. The United Kingdom is the only place where Opel’s British counterpart – Vauxhall operates. Combined, the two companies employ about 38,000 people across their manufacturing facilities in Germany, Poland, Hungary, Austria, Spain, Italy and the UK.
GM has lately been struggling to make profits in Europe, and despite their popularity, both Opel and Vauxhall have been unable to post profits since 1999. GM had also pulled out its flagship brand – Chevrolet, from most European markets in 2015.
Taking over Opel and Vauxhall will enable PSA to make its presence felt in more markets across the globe. The firm aims to re-enter the US market, which Citroen and Peugeot quit in 1974 and 1991 respectively.
Peugeot had also recently confirmed its plans to re-enter India by 2020. The company had a short, unsuccessful stint in the country in the 90s. Additionally, General Motors entered India with Opel around the same time. While Opel had generated much better market response than Peugeot, GM failed to keep up with the pace, which led to dwindling sales. Opel was phased out from India in 2006.
How PSA’s buyout of Opel and Vauxhall will impact its Indian re-entry plans is yet to be seen.