PSA-GM to confirm Opel deal tonight

The confirmation France’s PSA Group is to buy Opel from General Motors is expected at a joint press conference that kicks off in Paris at 6.15pm Monday evening Aussie east-coast time.

But how much – if anything – will be revealed about the impact on Holden and its future model plans is unknown.

Opel currently ships the Astra small car to Holden and will soon add the imported Commodore, which is based on the all-new Insignia. Other Opel models were expected to feature in future Holden line-ups.

PSA, which owns the Peugeot and Citroen brands, already has a technology agreement to develop and manufacture SUVs with Opel starting with the Citroen C-Aircross and Opel Crossland X that debut at the Geneva motor show this week.

PSA CEO Carlos Tavares has already said the Opel line-up would be re-developed with PSA’s own technologies to achieve rapid savings. Backroom operations including purchasing, supply chains and logistics are also expected to be combined to save money.

Among other models, Opel is the GM development homeroom for both the D2-architetcure based Astra/Cruze small car family and the E2-based Insignia that spawns models not only for Holden, but also Buick.

How long Opel would hang on to those roles and those cars would exist under the new ownership arrangement is unclear.

It may well end up that responsibility for the small car (will it still be called an Astra?) and large car that are exported to Australia by GM will be developed in the USA, Korea or China. One thing is certain, the ownership of the architectures themselves remain locked with GM and that’s good news for Holden model continuity.

The deal would also see GM’s number one right-hand drive brand, Vauxhall, removed from the group. Holden has long piggybacked on RHD conversion investment for the UK brand to add to its local model range.

However, unlike Opel/Vauxhall, Holden makes money for GM, a trend that is expected to continue and improve once its ceases local manufacturing and becomes an importer late this year. Holden also sources RHD production from Korea and has had a couple of recent wins in North America with the upcoming Acadia and Equinox both sourced from there.

The deal to acquire Opel, which hasn’t made money for GM since 1999, was reportedly approved by the PSA supervisory board last Friday. That board includes representatives of the French government, the Peugeot family and China’s Dongfeng Motor.

According to European automotive and financial media reports, PSA, which manufactures Peugeot and Citroen vehicles, will pay between 1.6 and 1.8 billion Euros ($AUD 2.2-2.5 billion) for Opel and its UK division, Vauxhall.

The French business paper Les Echos reported PSA will pay half the sum immediately and half in shares, which means GM will at some point become a PSA shareholder and retain on its balance sheet the bulk of the pension provisions for Opel workers, said to be underfunded by about $USD9 billion ($USD 11.8 billion).

The pension fund was reported as one sticking point in negotiations that have been going on for months. Another has been permission to continue selling models such as the full-electric Ampera-e developed with GM patents. PSA will pay license fees to do so.

There was also conflicts over GM’s demand that a PSA-owned Opel be barred from competing against Chevrolet in China and other markets overseas. On the flipside, GM’s right to re-introduce Chevrolets to Europe was also disputed.

Automotive analysts have widely recognised the validity of an exit from Opel for General Motors, which clearly wants to focus primarily on its primary money making-markets in the US and China.

For PSA the benefits are less clear. It will instantly grow to become the second largest auto group in Europe behind Volkswagen and ahead of arch-rival Renault, but it will also take on a car company that builds its cars in Germany rather than cheaper locations and has a highly-unionised workforce that will fight job cuts bitterly.

But Tavares calls the new combine an "opportunity to create a European car champion” with the ability to quickly exceed five million vehicle sales per year.

Tavares also has a lot of brownie points up his sleeve at PSA after swapping across two years ago from Renault-Nissan, where he was Carlos Ghosn’s deputy. From the edge of bankruptcy he has rebuilt the group to report an 18 per cent increase in earnings in 2016 and an automotive operating profit rise from five to six per cent.