Peugeot-Citroën buys Vauxhall and Opel from GM

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Groupe PSA, the owner of Peugeot and Citroën has agreed a deal with General Motors to buy its European car brands Vauxhall and Opel for €2.2 billion.

With Brexit likely to impact on all the countries concerned, the announcement will create yet more tensions between the governments of France, the home of PSA, Germany, the home of Opel, and Britain, the home of Vauxhall, to protect jobs and plants in their countries.

Speaking about the deal, Carlos Tavares, the boss of PSA, said the acquisition offered an “opportunity to create a European car champion”. The combined sales of PSA, Vauxhall and Opel would be more than 5 million vehicles a year, around half of the VW Group giant and second in the European sales league.

While the new merged group has many strengths, new owners PSA are likely to be looking to cut as much as €2bn (£1.7bn) in annual costs in the merger. Vauxhall and Opel also have a growing pensions deficit or over a £1 billion that will need to be addressed.

In the UK, Vauxhall employs 4,500 workers across its UK production sites at Ellesmere Port in Cheshire and Luton, jobs that Teresa May will be keen to secure. Indeed, Tavares has already held talks with the UK Government about the deal and has given assurances about existing commitments which means that UK production lines are safe guarded until at least 2021.

However, Sir Vince Cable, who held the role as business secretary in the previous administration has warned that Brexit will lead to cuts at Vauxhall. With half of Opel’s workforce in Germany, Cable said: “I imagine there will be some ferocious German canvassing and it’s difficult to see what Britain can offer other than years of uncertainty.”

Given the high political stakes, current business secretary Greg Clark has promised “unbounded commitment” from UK Government to protecting jobs in the UK stating in the House of Commons last month that the government would “do everything we can” to protect Vauxhall.

Perhaps with special post-Brexit support for Vauxhall in mind, as has reportedly been promised to Nissan with its Sunderland plant, Clark continued: “My personal commitment and the commitment of this government will be unbounded to make sure the future of the workforce will be maintained.”