French carmaker’s Vauxhall motives remain a puzzle says Midlands analyst
French carmaker PSA’s interest in acquiring struggling General Motors’ subsidiary Vauxhall/Opel remains a puzzle, a Midlands motor industry analyst has said.
The Peugeot Citroen manufacturer has just announced a doubling of its profits but John Colley, a Professor of Practice in the Strategy & International Business group at Warwick Business School, said the company’s motives remained unclear.
Prof Colley, who also researches M&A activity, said: “Carlos Tavares (CEO of PSA) clearly believes in making bids from a position of strength.
“PSA’s results improved again while Vauxhall/Opel continues to absorb €1bn each year. It still is not clear why Tavares wants the two brands.”
He said one possibility that PSA wanted to access the US market with the Opel brand to avoid any stigma American buyers attached to French car brands appeared unlikely.
“Although it is another argument for retaining the high cost German plants, which are expensive and politically difficult to close,” he added.
This is unlike plants in the UK where labour laws are less strict and plant closure is a more viable option, making the future of Vauxhall factories at Luton and Ellesmere Port – home of the Vauxhall Astra – more uncertain.
“Integration benefits with PSA look to be minor, so cost savings remains the most likely strategy. The promise to develop the Vauxhall brand has an ominous ring about it,” said Prof Colley.
“The branded cars do not need to be made in the UK. Promises made to achieve deal approval usually have finite lives. Expect the UK to feel the brunt of the savings.”
