This month saw the General Motor’s two European brands officially move to the PSA group stable to join with Peugeot, Citroen and DS to make the new expanded stable a significant player in the European market with a 17% marketshare. The Peugeot group plans to build on the complementary strengths of the five brands to grow its position and grow its reach worldwide.
The two new brands are working on a strategic plan that integrates them into the fold and have 100 days to present it to the group, with the aim of improving margins with the savings resulting from the merger, currently estimated at around 1.7 billion Euro.
The PSA group has been facing major challenges over the past few years and was itself looking for a buyout of sorts. Now with the takeover of the German and British brands, the group needs to manage better efficiencies as well as to integrate production systems and product development that could lead to better per unit realisation across the range.
Hopefully this will lead to a growth in bottom line figures for the group as a whole. In the meantime, while the brands have officially joined on August 1, the acquisition of GM Financial’s European operations are still under way pending various regulatory approvals. This should happen sometime during the second half of this year.
Carlos Tavares, Chairman of the Managing Board of Groupe PSA, comments: “We are embarking today with Opel and Vauxhall on a new stage in Groupe PSA’s development. This project became a reality with a few months only, thanks to the outstanding work of the teams and I want to thank them warmly. We will grasp this opportunity to build on one another’s strengths and to attract new customers, thanks to the implementation of the performance plan that Opel and Vauxhall will implement. In parallel, the execution of the Push to Pass plan remains a top priority for the teams, they are focused on achieving the objectives. We have confidence in the momentum that these strategies will create, to the benefit of all stakeholders.”
The CarGuide View
The growth of PSA’s portfolio looks at first glance like an astute move, since the greater volumes and access to new platform lines will help in better efficiencies. However, unless a new strategy is used, both the halves of the union could end up continuing on their stressed paths. Manufacturing consolidation is a must, as is being able to reduce cost by moving to plants outside the EU. That may be tough. And then there is the issue of Brexit that could prove to be a thorn in the new enlarged operations of a largely continental company.