Opel and PSA post weakest sales growth in Europe as merger discussions continue

February 17, 2017

General Motors’ (GM’s) Opel and PSA Group achieved weak European sales growth in January compared to rivals as talks continue about a potential merger. 

New passenger car registration figures released by the Association of European Carmakers (ACEA) show that PSA Group sales volumes  – which include the Peugeot, Citroën and struggling DS brands, rose only 6.5% in January year on year. GM’s Opel and sister UK brand Vauxhall performed even worse, rising only 5.3% - despite the month having extra working days compared to a year earlier. 

This compares to an average 10% rise across all brands, with sales rising to 1.204m units from 1.094m in 2016. Market leader Volkswagen Group, achieved a healthy 10% growth despite its tarnished reputation following Dieselgate; PSA’s French rival Renault, the current number two in the market also achieved 10% growth. FCA (Fiat Chrysler Automobiles) did even better, with sales surging 15%, and Ford, GM's main rival, had 9.5% growth. 

PSA’s Europe market share in January reached 10.1%, with Opel on 6.3%, according to ACEA.   

Meanwhile, as PSA and GM go out of their way to convince governments and unions over PSA’s expected acquisition of Opel-Vauxhall, PSA Group chief executive officer Carlos Tavares has said that he intends to keep Opel as a German company if PSA acquires the brand. He is also open to keeping Opel’s current management structure – widely thought to be Opel’s best in years. There are concerns that the merger would lead to large job losses at Opel and a massive overhaul of the brand. 

The concerns are very real, with Manager Magazin reporting that Opel chief executive officer Karl-Thomas Neumann has for months been working on a survival strategy that focused on turning the carmaker into an electric-only brand. Opel’s top managers were surprised by the announcement of the merger talks by GM and PSA on Tuesday, with perhaps only Neumann among senior executives having known earlier. 

Tavares is set to meet German government and union officials soon, where he is expected to present the deal as ‘an alliance between a French carmaker and a German carmaker’ – leading to questions about where the expected job losses will fall

In private discussions, GM and PSA are both saying that Opel will face sharper job cuts under continued GM ownership than if the merger with PSA goes ahead. Of GM Europe’s 38,000 staff, around 19,000 are in Germany and 4,500 in the UK. 

The Financial Times reports that the deal is expected to be finalised before the Geneva Motor Show in just over two weeks’ time.






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