Peugeot in talks about buying Opel

PSA Group, make of Peugeot, DS and Citroen cars, is in talks about taking over General Motors’ (GM) loss-making European business Opel.

France’s PSA group already works with GM in Europe on several projects, said any deal would involve Opel’s UK arm Vauxhall, which employs 4, 500 staff at plants at Ellesmere Port and Luton.

With an Opel takeover, GM signals exit the UK and Europe while boosting PSA Group into Europe’s second largest carmaker – behind VW with a 16 per cent share of the European market. Renault-Nissan is currently Europe’s second-biggest carmaker.

The French states hold 14 per cent stake in PSA, also Chinese firm Dongfeng Motor and the Peugeot family.

The PSA announcement comes a week after GM who was into the 16^th consecutive loss-making year, reported a loss of $257m from its European operations last year. Low oil prices have pushed GM to explore the possibility of selling their European arm.

For GM, selling its loss-making European arm would mean it’s losing a vast reserve of expertise in designing small engine and cars which are pretty small in relation to the American perspective.