Can Opel Disappear After Being Bought By PSA?

The German company Opel, owned by the giant General Motors, has been officially sold to the PSA Group. These changes of hands by car companies can, at times, spell the end of a form, which is reorganized or restructured within the new company. Could this be the end of Opel?

Opel’s poor results

After weeks of negotiations, last year 2017 the purchase of the Opel firm by the PSA Group, owner of such famous brands as Peugeot, Citröen or DS Automobiles, became effective.

The two groups together accounted for 4.3 million cars sold in 2016 worldwide, and they aim to exceed five million in less than five years.

Opel, and its associated brand Vauxhall in the United Kingdom, have been in a difficult financial situation for several years, with losses in 2016 of 257 million dollars (about 242 million euros).

This result was even worse in the previous year, with losses of 813 million in 2015. The financial balance of that same 2016 was its sixteenth annual financial year in the red. In this period, General Motors has lost a real fortune with Opel, which rises to about 20 billion dollars.

All these years Opel has been trying to fight within the intensely competitive European car market, and for this it has had to invest heavily in technology.

As an example, you have invested in the development of a whole new family of diesel engines that are not used anywhere else in the world. In addition, General Motors has not wanted the Opel brand to expand its borders and compete in other markets, due to the already high competition with other brands within Europe.

The sale of Opel

With the sale agreement in favor of the PSA group, General Motors has removed a problem from above, since the German company of the American group has been losing money every year for 16 years.

Even in 2016, in which although the negative figures have been reduced notably, the balance that the North American multinational had planned has not been reached. It is possible that this data has been the one that has accelerated the negotiations for the sales of the firm.

On the other hand, the PSA Group manages to take a notable step up in Europe thanks to this agreement, by positioning itself as the second European manufacturer, with a wide margin over Renault.

In addition, it is no longer that far behind the powerful Volkswagen group when it comes to sales figures. The German group sells about 4 million units per year in Europe, but it does so with 12 brands. Meanwhile, the PSA Group is approaching these figures, but with only four brands in its repertoire within Europe.

The benefits of PSA thanks to Opel

Regarding the figures for each firm owned by the PSA Group, Peugeot sold 2.11 million vehicles worldwide in 2017. This represents an increase of 10.4% compared to the previous year. Meanwhile, Citroën deliveries fell 7.5% to 1.05 million units.

Along with these two brands, DS Automobiles registered a total of 52,860 units in all the markets in which it operates during the past year. This represents a considerable decline of 38.5% when compared to the 85,981 units sold in 2016.

During the whole of last year 2017, the recently acquired firms Opel and Vauxhall reached a high number of registrations, with 403 933 units.

PSA sales by region

In its distribution by regions, the PSA Group as a whole registered 2.3 million vehicles in Europe in 2017, 23.2% more than the previous year. On the other hand, its deliveries in the automobile markets of the Middle East and Africa improved by 61.4%, to 618,827 units.

The French corporation delivered 387,302 units in China and Southeast Asia, which is 37.4% less than in the previous year. In addition, it sold 206,275 units in Latin America, 12.2% more. Finally, in India and the Pacific, their commercial data improved by 31%, to 26,053 units.

In short, the PSA Group has experienced increases and decreases in sales in its different firms and in the different markets in which it operates.

Even so, Opel is one of the best- performing firms, so, in light of its profits, it seems unlikely that the French company will make major changes to Opel’s structure that could lead to its demise.