GM mulls selling Opel to PSA Group as profits prove elusive

AUSTRALIA’S 2018 Holden Commodore could soon speak with a French accent. General Motors has confirmed it is in talks with Peugeot-Citroën’s parent company, PSA, about a potential sale of GM’s Europe-based Opel and Vauxhall businesses.

Holden has confirmed the next version of the Commodore will be based on a fully imported version of the Opel Insignia, a mid-size five-door hatchback sedan and wagon range, once local Commodore production switches off late this year.

If the deal goes through and PSA becomes a majority stakeholder in Opel, it effectively means the Insignia-based Commodore will be built under French, and not German, ownership. Same goes for Vauxhall, which sources the bulk of its showroom from Opel.

Holden issued a brief statement reacting to the news. "GM remains committed to the Holden brand in Australia and we don't expect any changes to Holden’s vehicle portfolio," it said.

"Right now we are focussed on ramping up Astra volume and preparing to launch the fantastic next-generation Commodore in 2018."

A joint statement released by GM and PSA overnight also played down the significance of the talks.

"Since 2012, General Motors and PSA Group have been implementing an alliance covering, to date, three projects in Europe and generating substantial synergies for the two groups," it said.

"Within this framework, General Motors and PSA Group regularly examine additional expansion and cooperation possibilities, as well.

"PSA Group and General Motors confirm they are exploring numerous strategic initiatives aiming at improving profitability and operational efficiency, including a potential acquisition of Opel Vauxhall by PSA," it said.

"There can be no assurance that an agreement will be reached."

Speculation has already suggested that the cash raised from the Opel sell-off would allow GM to add another global brand to its portfolio – struggling Italian/US carmaker Fiat Chrysler Automobiles.

FCA chief executive Sergio Marchionne in 2015 tried opening the door to a GM-led takeover of his debt-laden company, but the board of the world's third largest carmaker knocked back the proposal. FCA has since transformed itself int a much leaner company, which should make a takeover proposal much more attractive to GM.

GM’s decision to court PSA as a buyer for its Opel and Vauxhall brands comes as the German automaker continues to struggle to return to profitability. Opel hasn’t managed to record an operating profit since 1999, and has spread copious amounts of red ink on The General’s ledgers ever since.

In 2012 Opel/Vauxhall recorded a monstrous AU$23.5 billion loss, while last year’s financials saw the two brands go $335.8m into the red. With that knowledge, GM’s eagerness to offload the Opel and Vauxhall brands becomes understandable.

PSA and GM are no strangers to doing business together either, having collaborated on three projects since 2012 as part of a technology-sharing alliance. However if a transfer of ownership occurs PSA won’t be just collaborating with Opel on future products – it will be steering the ship.

With Barry Park