Brexit forced GM to do Opel deal as PSA splashes €2.2bn

The boss of General Motors today said its loss-making Opel arm would have broken even were it not for Brexit, as its new owners pledged to get it back in the black within three years.

Peugeot and Citroën owner, PSA, today added Vauxhall to its garage with a €2.2 billion (£1.9 billion) deal.

The acquisition — which will make PSA the second-largest carmaker in Europe after Volkswagen — comes after a decade of Opel losses in Europe and 90 years of GM ownership.

GM chief executive Mary Barra said: “It’s clear the team would have hit the goal to break even in 2016 had it not been for Brexit”, after the pound’s plunge in the wake of June’s referendum result puts the brakes on GM’s hopes of getting the division back into profit.

PSA was itself teetering on the verge of collapse only three years ago, but its chief executive Carlos Tavares claimed the larger car group will be better able to compete in Europe’s saturated car market, with pooled costs forecast to bring in annual savings of €1.7 billion by 2026.

PSA vowed that Opel and its British Vauxhall brand will be back in profit, with an operating margin of 2% by 2020 and 6% by 2026.

The deal comes amid grave concerns about Vauxhall’s UK workforce — including 1830 staff at its factory in Ellesmere Port in Cheshire and a further 1530 at the factory in Luton — and Tavares’ reputation for being ruthless after axing thousands of jobs at Peugeot and Citroën.

PSA has now promised to keep existing GM commitments to workers, which include a jobs guarantee that runs until the end of 2018.

GM is cutting loose Opel after losses totalling about $9 billion (£7.3 billion) since 2009. Barra said the “difficult decision” to sell came after the divison missed last year’s break-even target.

Britain is Opel’s largest European market and last year Opel fell to a $257 million loss.

The marque at present makes its Astra model at both Ellesmere Port and in Poland, and a decision on where to build the next model had been due within 18 months.