Peugeot buys Vauxhall from GM, eyes Brexit supplier opportunities

US car giant General Motors has confirmed the sale of its European operations, including the Opel and Vauxhall brands, to Peugeot and Citroen owner PSA Group for €2.2bn.

PSA will pay €1.3bn for the two car marques, while GM's regional financial operations will be jointly acquired by Peugeot and BNP Paribas for roughly €900m.

GM will have warrants to buy 4.2% of PSA's capital with an exercise date five years after the issue date.

The deal will turn PSA into Europe's second largest carmaker after Volkswagen.

"Opel/Vauxhall’s financing operations are critical to the development of the Opel and Vauxhall brands. We are proud to join our forces with BNP Paribas, a leading European banking partner, and are confident our complementary expertise will make this new partnership a success,” said PSA chairman Carlos Tavares.

"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," Tavares said in the statement.

With the deal expected to create annual savings in purchasing, manufacturing, and research and development of €1.7bn by 2026, Tavares said the estimate did not include any job cuts.

There remain fears over the 4,500 jobs at Vauxhall's plants at Luton and Ellesmere Port in the UK, despite assurances from UK government ministers and union leaders, especially once existing contracts start to expire in 2021.

Speaking to the press, Tavares later said if the UK pursues a hard Brexit it would be “a very nice opportunity” for PSA to source more car parts from inside the UK to give the whole operation a “pound cost structure”.

If the UK had a softer Brexit, the focus would be more on being competitive in the UK versus other countries, with one benefit coming from the cheaper pound.

Business Secretary Greg Clark said: “Vauxhall has a long history of success in this country and we are determined to see that continue.

"The Government welcomes the assurance by PSA that they will respect the commitments made by GM to Vauxhall’s employees and pensioners.

"The Prime Minister and I have been in close contact with the PSA Group and General Motors and they have been clear this deal is an opportunity to grow the Vauxhall brand, building on their existing strengths and commitments.