Changing the Peugeot and GM alliance plans
GM in talks to sell the business in the European automotive Peugeot.
By Pamela Barbaglia and Edward Taylor FRANKFURT LONDON.
LONDON FRANKFURT In a move that could shake the global auto industry, General Motors Co GM N and French carmaker PSA Group announced Tuesday that they are in talks that could lead to PSA purchasing European automotive operations to GM .
For PSA, owner of Peugeot, Citroën and DS brands, the acquisition of GM Opel and Vauxhall brands would give him a 16-3 percent share of the European passenger car market, vaulting into second place in the region, ahead of his rival french Renault SA and Volkswagen AG in Germany behind.
Any agreement will have to overcome financial barriers, and industrial policies of the German Industrial Union IG Metall Tuesday fired a warning shot, saying that if the companies were discussing the sale of Opel, without the involvement of the union, it would be an unprecedented violation of the rights of German and European co German Economy Minister Brigitte Zypries said it was totally unacceptable that the talks were held on French automaker PSA buy the European unit Opel GM without consulting the German works councils or local authorities.
The French government, which owns 14 percent of PSA, could support an agreement that would help PSA to reach a critical mass, a source from the Ministry of Economy told Reuters that the government will pay special attention to the impact in terms jobs and the industrial impact of these initiatives, the source said France is in the midst of a heated national election campaign.
A spokesman of the Peugeot family, which holds a corresponding stake in the automaker, was not immediately available.
It is not known what GM might want to price the loss to European affairs, or what is the structure of an agreement might take.
Both companies have warned in statements that no agreement is certain, but investors cheered communication, sending PSA shares owner of Peugeot and Citroën brands, up 3 percent and 7 boost GM shares by 3 to 5 percent in early trading in New York.
Fiat Chrysler Automobiles NV's shares rose 3 9 percent as investors speculated that a set of consolidation could lead to another Fiat Chrysler, Sergio Marchionne, CEO campaigned for over one year for GM to combine with his company.
For GM, Opel sale would be the most dramatic demonstration yet of the strategy of chief executive Mary Barra to the profitability and return on invested capital before market share.
Since the management as CEO of GM in January 2014, Barra signed on decisions to quit markets, including Russia and Indonesia, where GM lost money, take the brand Chevrolet on Europe, and slash sales to rental car fleets as long stalled US market share with little or no profit.
Global market share of GM fell 0 3 percentage points last year selling Opel and Vauxhall, which added nearly 1 million cars to its sales, could mean the abandonment of the race overall volume in which he is currently ranked third behind Volkswagen and Toyota Motor Corp. 7203 T, with just over 10 million units shipped last year.
In 2015, Barra the board of GM and suppressed an attempt by a group of investors to install representatives of the automaker's board by agreeing to return more money to shareholders, and target 20 percent or a better return on GM executives on investment said the measure that pushes them to put more money in the for-profit markets, such as trucks and SUVs in the US, or growth opportunities such the development of autonomous cars for tour services, and less in low-earning businesses.
In 2016, GM said its return on capital was 28 9 percent.
Despite the provision of strong and promising profit 9 billion in buybacks between 2015 and 2017, GM shares are still trading below the 41 level of action they reached in December 2013, just before Barra took over as CEO.
GM Europe has been a drag last year Opel and Vauxhall since 1999, the overall profitability of the automaker posted a net profit GM restructured its European operations over the past six years, the closure of the Opel plant in Belgium and Germany and the withdrawal of Saab and Chevrolet sales yet, GM Europe has not managed to break even in 2016 as Barra had promised, and the company said last week it did not expect profits the operation until 2018.
In the future, GM faces the prospect of heavy investments to comply with European government and consumer demands for cleaner diesel vehicles, and to catch up with a rapid shift to sport utility vehicles.
GM had already discussed the sale of its European automotive business to Canadian parts maker Magna after the financial crisis, while GM was heading towards bankruptcy led by the US government but GM pulled the plug on the agreement of principle in 2009.
GM and PSA have already shared the production of vans and developed common vehicle platforms, a relic of their latest attempt to forge a broad alliance, which was held in 2013 with the sale of the automaker US PSA participation .
Opel sale would release GM to invest more to develop vehicles for the North American and Chinese markets, where it makes almost all of its automotive profit, as well as develop new business.
It is not known how PSA would reduce costs in a combined group PSA France has 10 factories in Europe and General Motors has 11 factories.
Deputy Director General Carlos Tavares, PSA bounced a 2013-14 brush with bankruptcy to a record level of results, posting an operating margin automotive August 6 percent in the first half of last year.
Additional reporting by Gilles Guillaume and Laurence Frost in Paris and blanc Joe in Detroit; Written by Laurence Frost; Editing by Keith Weir and Tom Brown.
GM in talks to sell the business in the European automotive Peugeot Reuters, talks, sell, European.