Global, Markets

Owner of Peugeot-Citroen closed agreement of to takeover General Motors’ European unit

According to latest publications, The French firm that is owner of Peugeot and Citroen has struck a $2.34 billion euro deal to takeover General Motors’ European unit, including Vauxhall.

General Motors’ European unit has been on constant loss since 1999 and the transaction has raised fears about job losses at Vauxhall.

The UK factories at Ellesmere Port and Luton employ about 4,500 people. Following the takeover, PSA Group would become the second largest car-maker in Europe, behind Volkswagen.

Carlos Tavares, chairman of PSA’s managing board, said in a statement: “We are confident that the Opel/Vauxhall turnaround will significantly accelerate with our support, while respecting the commitments made by GM to the Opel/Vauxhall employees.”

In a statement, General Motors’ chairman and chief executive Mary Barra said, it was not an easy decision to sell Opel and Vauxhall, and claimed that the business would have busted even in 2016 had it not been for the UK’s decision to leave the European Union, which caused a sharp drop in the value of the pound.

Meanwhile PSA Group says it has a plan to slash costs to raise profits, which is a worrying sign for more than 4,000 Vauxhall jobs in the UK.

However, the new owners had meeting with government and unions last week and offered assurance that current production commitments would be honoured at Ellesmere Port till 2020 and Luton for some years beyond that.

Expert though presume that the 24 factories the combined company will have in Europe are way more than necessary.

The agreement in the mean time marks departure from Europe for GM which has lost billions here since the turn of the millennium. It will give them space to focus on its home market of the US and its growing operations in China.

The agreement also comprises PSA takeover of GM Europe’s financial operations for 900 million Euros in a combined deal with bank BNP Paribas.

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