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EU approves sale of Opel to PSA Group

The PSA group has secured EU antitrust approval to acquire General Motors’ European division Opel and Vauxhall.

The European Commission concluded the deal did not pose any competition concern, Reuters reports.

PSA strategy director Patrice Lucas described the decision as “an important step” and said that the companies’ teams are now concentrating on fulfilling other conditions necessary to close the deal, expected before the end of the year.

The terms of sale between GM and the PSA Group, which manufactures Citroën, Peugeot and DS-branded vehicles, were finalised on March 7 after weeks of negotiations.

The European company was valued at $3.4 billion, and the acquisition of Opel/Vauxhall gives PSA a 17 per cent share of the auto industry in Europe.

The merger means research and development and manufacturing costs will be slashed for the struggling German car maker, and PSA expects the Opel/Vauxhall division will reach a two per cent operating margin by 2020.

The Holden brand, also owned by GM, was not part of the sale. PSA has said the existing supply agreements between the Australian marque and Opel, who manufactures the Holden Astra and will begin manufacturing the Commodore from early 2018, will continue.

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Opel CEO resigns

Opel CEO Michael Lohscheller

Opel is losing its CEO just two months after being sold by General Motors to the PSA Group.

Karl-Thomas Neumann resigned on Monday, and Reuters reports that Volkswagen is rehiring the executive, who formerly worked as a division manager.

“The prospects are good that he will move to Volkswagen,” said Bankhaus Metzler analyst Juergen Pieper. “He’s one of Germany’s most distinguished car managers and VW is in great need for excellent people.”

“Under Neumann’s leadership we have made enormous progress in turning around Opel,” said GM president Dan Ammann. Neumann, who took the reins in 2013, is credited for turning around Opel’s fortunes and restoring its image and reputation. The next CEO will be current finance chief Michael Lohscheller.

GM announced the sale of struggling car maker to the PSA Group for $3.3 billion in March 2017. The deal was reached on the condition that Opel reach an ambitious two per cent operating margin in 2020, up to six per cent by 2026.

The sale of Opel includes the British-made Vauxhall marque. While Opel currently manufactures the GM-owned Holden Commodore and Astra, the Australian brand was not part of the sale, and  existing supply agreements will continue.

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PSA commits to GM marques

Opel has committed to building GM-branded vehicles in its German factories for the foreseeable future, following the sale of Opel and Vauxhall to PSA Group last month.

Workers at Opel’s factory on Russelsheim, Germany, were told that PSA will be locked in to producing vehicles based on GM platforms for a number of years, Reuters reports. Buick was singled out as an ongoing commitment by the French car maker.

The Opel/Vauxhall group is set to be consolidated into Adam Opel GmbH, a limited liability company which will “lead to a less complex organisational structure,” Opel said.

“The successor of the Mokka X will be built in Eisenach from 2019. A large SUV will be produced in Ruesselsheim as of the end of the decade,” Opel said in a statement last night.

“In addition, investments are also confirmed for exports of sister products for another GM brand from these plants.”

The Opel/Vauxhall group is set to be consolidated into Adam Opel GmbH, a limited liability company which will “lead to a less complex organisational structure,” Opel said.

The Russelsheim factory is also the site of production for the Opel Insignia, which is badged as the Buick Regal in the US and the Holden Commodore in Australia and New Zealand. While the future of the Commodore is uncertain, PSA’s investment into GM-branded products at Russelsheim suggests that production will continue at in Opel’s German factory for some time.

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FCA merger snubbed by GM, VW

Fiat Chrysler CEO Sergio Marchionne’s attempts to discuss a merger with larger car makers have been rebuffed by both VW and GM in the wake of PSA’s acquisition of Opel.

On Tuesday, Marchionne said the sale would create pressure on VW, which could prompt the German car maker to sit down with Fiat Chrysler.

VW CEO Matthias Mueller dismissed the claim at the Geneva Auto Show, telling Reuters that the company was too busy with the fallout of the emissions scandal. “We’re not ready for talks about anything,” Mueller said. “We have other problems.”

The German inquiry into the VW emissions scandal is in its final days, with German chancellor Angela Merkel set to testify amid controversy over her close relationship with former CEO Martin Winterkorn and ongoing friction with US environmental authorities.

Marchionne has been a long-term advocate for mergers between car makers, which would share the costs of research and development in the effort to produce cleaner, more technologically advanced vehicles.

“You need to achieve scale or we will end up delivering an incredibly poor return and margins on this business. We need to fix this,” he said.

Mueller’s rejection of a merger follows a similar dismissal from GM, after Marchionne said the American car maker was his preferred choice.

“We weren’t interested before, and we’re even less interested now,” GM President Dan Ammann told reporters in Geneva.

Fiat Chrysler lags behind other car makers in Europe, with a market share of seven per cent and an operating margin of 2.5, below most of its rivals.

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Opel sold for $3.3 billion

An agreement on the sale of GM’s Opel/Vauxhall divisions to French car maker PSA, which includes brands Peugeot and Citroen, was met after several weeks of negotiations. The deal was announced at a joint press conference in Paris last night.

“We are proud to join forces with Opel/Vauxhall and are deeply committed to continuing to develop this great company and accelerating its turnaround,” said Carlos Tavares, chairman of the Managing Board of PSA, in a statement.

“We intend to manage PSA and Opel/Vauxhall, capitalising on their respective brand identities.” He added. “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.”

The Opel/Vauxhall division was valued at just under $2 billion, and GM’s European financial operations were valued at $1.36 billion. The company generated $26.8 billion of revenue in 2016. The acquisition of GM’s European holdings gives PSA a 17 per cent market share of the auto industry in Europe, making them second behind the Volkswagen group on 24 per cent.

The transaction includes all of Opel/Vauxhall’s automotive operations, with the Opel and Vauxhall brands, six assembly plants, five component-manufacturing facilities, one engineering centre in Germany and approximately 40,000 employees. The pension fund shortfall, which hampered discussion last week, has also been met, with GM promising to pay a $4.5 billion settlement.

 “We are very pleased that together, GM, our valued colleagues at Opel/Vauxhall and PSA have created a new opportunity to enhance the long-term performance of our respective companies building on the success of our prior alliance”, said GM CEO Mary Barra.

“We believe this new chapter puts Opel and Vauxhall in an even stronger position for the long term and we look forward to our participation in the future success and strong value-creation potential of PSA.”

The acquisition of Opel/Vauxhall means lower costs in research and development and manufacturing due to a significant increase in economies of scale. PSA expects Opel/Vauxhall to reach a 2 per cent operating margin in 2020 and will generate operational free cash flow.

The Holden brand was not part of the sale, which only included GM’s European operations, and the joint statement confirmed that existing supply agreements for Holden will continue.

In their own press release, Holden said, “Holden and Opel have had close ties for many years and delivered fantastic vehicles to Australian customers, including the current all-new Astra and the next generation Commodore due in 2018. The good news is these product programs are not affected at all.”

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PSA and GM to confirm sale of Opel

General Motors and France’s PSA group is set to hold a joint press conference in Paris tonight, where it is expected the sale of Opel to PSA will be confirmed.

Reuters reported the deal had won PSA board approval, which includes the French government, the Peugeot family, and Chinese car maker Dongfeng, on Saturday.

Negotiations had been hampered over a $14.2 billion pension deficit in the Opel company, and demands by GM that a PSA-owned Opel be barred from competing against GM’s own Chevrolet line-up in certain markets.

However, sources told Reuters on Thursday the non-compete issues and pension deficit had been resolved, with GM agreeing to boost its funding injection into the pension plan.

The acquisition of Opel will make PSA, which currently manufactures Peugeot, Citroen and DS cars, the second-largest car maker in Europe after Volkswagen.

Both PSA and GM confirmed talks were underway last month over the sale of Opel and the British Vauxhall brand, which sparked discussion and concern over possible job cuts and factory closures. Opel and Vauxhall currently employ 38,000 people in the UK and Germany. PSA said it would honour existing manufacturing contracts that run through to 2020.

The acquisition of Opel comes after GM reported a 16th consecutive loss for its European manufacturing arm.

According to Reuters, PSA CEO Carlos Tavares also told his board that PSA would redevelop the Opel line-up with its own technologies to achieve rapid savings for the brand. PSA avoided bankruptcy in 2014 by selling 14 per cent stakes of the company to the French government and Dongfeng.

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DS7 Crossback revealed

PSA has premiered the DS7 Crossback in time for the Geneva Auto show. The Crossback is a full production car range due in British showrooms next January.

The DS7 Crossback will come with six engine options. The 1.2-litre three-cylinder PureTech 130 S&S six-speed manual generates 95kW of power. The 1.6-litre THP 180 S&S is an eight-speed automatic petrol that produces 132kW.

Above it, the eight-speed automatic THP 230 S&S puts out 169kW, making it the most powerful of the petrol options.

There are two diesel options for the Crossback – the frugal 1.5-litre BlueHDi 130 S&S is the first, producing 95kW available as both a six-speed manual and an eight-speed automatic. The BlueHDi 180 contains a 2.0 litre engine which generates 132kW and an eight-speed automatic transmission.

The Crossback range will also include the E-Tense Hybrid, which contains two electric motors alongside a 148kW version of the 1.6-litre engine. 

The vehicle will also include a new multi-link rear axle to locate the back wheels more precisely and road-scanning technology, which will detect potholes ahead via a camera and soften the dampers if necessary.

The petrol and diesel options are front-wheel drive. The E-Tense Hybrid’s hang-on rear electric drive axle converts it to an all-wheel drive configuration.

All but the entry-level models will sport active lights which pulse purple on unlock and actively swivel as the engine starts up.

“Having seen the DS 7 Crossback in the R&D stage at the factory in Paris a year ago, its outstanding to see it now launching to the public at Geneva,” said Simon Rose, the division manager for DS New Zealand. “These models, though, will just take some time to find their way to this part of the world.”

Right-hand drive production will begin in January 2018, with prices in Britain to start at around $48,500. Details on the New Zealand launch have yet to be announced.

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PSA sets targets for Opel merger

French manufacturer PSA Group expects the purchase of General Motors’ Opel division to lead to combined sales of 5 million vehicles by 2022, and could save up to $2.9 billion dollars annually, sources told Reuters. A deal could be finalised as soon as early March.

PSA and GM confirmed negotiations last week. The acquisition of Opel would make PSA group the second-largest European car maker, based on sales, after the Volkswagen group.

The targeted savings will come from purchasing and research and development, the sources claimed. New Opel models, such as the popular Corsa mini, could be brought into Peugeot’s development and manufacturing division to reduce duplication.

The merger is concerning for the 38,000 people employed in GM’s Opel and Vauxhall plants in Germany and Britain.

“PSA Group reaffirmed its commitment to respect the existing agreements in the European countries and to continue the dialogue with all parties,” the car maker said in a statement on Tuesday.

Exane BNP Paribas analyst Dominic O’Brien said the $2.94 billion savings could mean the eventual elimination of up to 6000 jobs. “The most obvious starting point for any restructuring, of course, lies with labour,” he said.

Current GM contracts guarantees the plant will run until 2019-20.

While no Opel-badged cars are currently imported into New Zealand commercially, Opel is set to manufacture the Holden Commodore in its German factories from 2018 onwards.

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