GM Pulls Back from European Market, Sells Opel and Vauxhall for $2.3 Billion
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General Motors has pulled back from the European automotive market after struggling to turn a profit there for almost two decades. The move saw GM sell their Opel and Vauxhall brands, as well as the European arm of their financial division, to French automaker PSA Group. PSA is the parent company of France's Peugeot and Citroen brands.
GM has not completely left the market, though, as Chevrolets will still be sold in small volumes to European consumers.
The deal, which is valued at around $2.3 billion, also includes 11 manufacturing facilities and one engineering center that employ 40,000 people collectively. Once approved, PSA will become the second largest automaker in Europe behind Volkswagen.
GM has struggled to gain traction in Europe. They have had difficulty even turning a profit there for the last two decades. GM CEO Mary Barra said that the automaker was projected to break even before the Brexit vote and subsequent economic uncertainty.
In a statement on March 6, Barra said the sale will allow GM to continue investing in "our core automotive business and in new technologies that are enabling us to lead the future of personal mobility." Along with other automakers, General Motors is spending billions to develop autonomous car technology. In 2016, the brand also invested $500 million in the ride-sharing service Lyft and released their first long-range electric vehicle, the Chevy Bolt EV.
Another reason for this sale is stunted growth in the U.S. and European markets. Both have been stagnant in recent years and are not projected to grow much in the near future. This is prompting many leading automakers to look at expanding in Asia. GM's Chevrolet, Cadillac, and Buick nameplates are all currently selling better in China than they are in the U.S., with the automaker selling 3.9 million vehicles in China last year.
"The European marketplace, like the U.S., is not expected to grow in the coming years," said Rebecca Lindland, an executive analyst at Kelley Blue Book. "PSA and GM, like everybody else, will look to the enormous potential in both China and India for expansion."
The GM-PSA deal is expected to be finalized by the end of the year if it can clear the necessary regulatory hurdles.
