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PSA Strikes Deal for GM Europe

PSA Strikes Deal for GM Europe

Added to MTDCNC by MTDCNC on 12 March 2017

The French PSA Group that owns Peugeot and Citroen has struck a €2.2bn (£1.9bn) deal to buy General Motors (GM) Vauxhall and Opel brands. The acquisition will create Europe's second largest carmaker behind the VW Group.

The PSA Group will pay €1.8bn (£1.56bn) for the two companies, while a separate €900m (£777m) deal has been agreed for GM Europe's financial operations alongside BNP Paribas. The remoaners will instantly take shots at this move, claiming a lack of confidence and uncertainty in the UK over the long process of Brexit. However, this isn't really the case. GM is moving away from Europe as a whole.

It was only last week that upon being pushed upon the future of its Bridgend Engine Plant by unions, Ford took the opportunity to raise concerns over plant running costs, poor productivity and restrictive working practices (enforced by the unions). However, in just a matter of hours local MPs and political classes used the media to state 'Brexit' as the cause of the uncertain future of the plant.

The Eurozone is plagued by high costs, mass unemployment, a hostile political class and a deflationary currency. As one of the world's largest automotive brands, GM has realised that it simply is not worth the hassle of trying to do business on this side of the Atlantic. 

Carlos Tavares, chairman of the managing board of PSA, said the group was 'deeply committed' to developing Vauxhall and Opel in light that the two brands generated revenue beyond €17.7bn in 2016. Despite this unrelenting commitment to the two brands, fears have emerged regarding what the deal will mean for Vauxhall's workers in the UK. Vauxhall employs 4,500 staff at Ellesmere Port and Luton.  The two sites manufacture the Astra and the Vivaro van. In a global industry, the future of these plants will be based upon productivity, output, costs and overall profitability. Politics and Brexit are further down the agenda for these companies than politicians would make us think....

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