PSA’s Opel-Vauxhall buy green-lighted by authorities

PSA’s takeover of the Opel and Vauxhall brands from General Motors has been given the green light by the European Commission (EC). The French maker of Peugeot and Citroen cars made the US$2.3 billion acquisition in March, but it needed approval from the authorities, which had to look at competition issues.

The EC has now “unconditionally approved” PSA’s move to buy GM’s European division, concluding that “the transaction would raise no competition concerns in the relevant markets,” BBC reported. The addition of Opel and Vauxhall makes PSA Europe’s second largest carmaker after Volkswagen.

The EC said that in terms of the manufacture and sales of vehicles, PSA and Opel-Vauxhall had a combined market share of more than 40% in only two European markets, Estonia and Portugal, for small commercial vehicles.

“In the other affected markets, the market shares remain small. The Commission investigation also showed that the merged entity will still face strong competition from manufacturers such as Renault, Volkswagen, Daimler, Ford, Fiat and various Asian competitors,” it concluded.

GM’s European division has been in the red since 1999, and last year was its 16th consecutive loss-making year, taking total losses to over $15 billion since 2000.

Opel employs around 33,500 staff in Germany, Poland, Hungary, Austria, Spain and Italy; while Vauxhall has 4,500 people working at two plants in the UK. It remains to be seen if PSA will maintain all of the production sites and the headcount.

Robert Peugeot, chairman of PSA’s strategy committee, said the Opel-Vauxhall purchase will help the group obtain economies of scale by being able to manufacture three million vehicles in one core market. “All large carmakers have a volume of three million cars in one important market,” he said. It will also “allow the group to conquer the rest of the world step by step,” according to family shareholder Jean-Philippe Peugeot.

Proton was an option in the global expansion quest, with regards to South-East Asia. PSA was an interested party and made a bid, but it was China’s Geely that ended up with a stake in the Malaysian carmaker.