Could a GM-Peugeot deal spell the end for Vauxhall in the UK?

EDITOR'S BLOG: The Detroit giant is apparently looking to sell off its European arm.

by Matthew Gwyther
Last Updated: 15 Feb 2017

So it appears that General Motors may be in the final stages of exiting its stricken European business. PSA Peugeot Citroen from Paris is in the late stages of agreeing a deal. It’s thought GM Europe hasn’t turned a profit since the late 90s and it lost 300 million euros last year.

This news might not be too promising for Vauxhall in the UK and its near 3,500 staff at Ellesmere Port and Luton, which produce an impressive 185,000 cars and vans each year. It hasn’t gone unnoticed that selling 80% of its output to Europe and shipping in 75% of components from Europe, Vauxhall could find that Brexit could well stick a spanner in its drive train. The Peugeot Citroen boss Carlos Tavares has been cutting costs for a while but facing down the French unions is never easy. His share price has risen almost threefold since almost tanking into non-existence back in 2013. The only thing that has kept the show on the road is a buoyant new car market but the peak of the current cycle is fast approaching. Second hand sales are also booming, incidentally - a record 8 million were sold in the UK last year.

The Chinese company Dongfeng and the French government both hold substantial minority stakes in Peugeot Citroen. GM’s Opel and vauxhall business both have cost bases that are too high. The French are highly unlikely to close plants in their homeland when the option to shutter plants in a non-EU member - the UK - would play well at home. The UK plants have been under threat for years and only escaped the axe in 2012 by a whisker. The worthy but humble Astra can be made far more cheaply in Poland.

This is truly the end of an era for GM, which entered the European market only three years after the company's foundation in 1908. Vauxhall was bought back in 1925 for a mere two and a half million bucks and a million and a half Vivas were sold when times were better. (The new Viva is built in Korea.) Trump will doubtless welcome the move away from foreign soil for his own absurd and misguided reasons.

While still strong in France, Citroen’s heighday in the UK is long gone and Peugeot no longer manufactures here. Citroen was overtaken by Hyundai a couple of years ago and concentrates on small town cars such as the C1, on which the margins are very tight indeed. Once the maker of wonderful machines such as the DS, those who love big Citroens now only have the C6 - the favoured wheels of mid ranking French politburo members - which can only be owned via special order.

So, while those on the Vauxhall production line in Luton and Cheshire await their fate in the meantime here’s Tavares’ 1976 smash hit ‘Heaven Must be Missing An Angel’

Image source: Kenjon Bro/Flickr

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