Peugeot Owner in Talks to Buy General Motors' European Operations

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German Economy Minister Brigitte Zypries said it was totally unacceptable that talks took place on French carmaker PSA Group buying General Motors' European Opel unit without consulting German works councils or local government. Since then, GM Europe's Opel and Vauxhall subsidiaries have struggled to get close to breaking even, while PSA has seen an impressive turnaround and posted strong profit margins for the past couple of years.

It's believed PSA will purchase Opel from GM, though this is yet to be confirmed.

General Motors cutting its losses in Europe may be the right move.

PSA and GM formed an alliance in 2012 on three vehicle projects with an eye toward saving $2 billion by 2018.

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Combining PSA Group with Opel and its British brand Vauxhall would create the second-largest carmaker by market share in Europe, with 16.6 percent of sales according to 2016 figures. There had been hopes of breaking even in 2016 but these had been scuppered by the vote by the United Kingdom to leave the European Union.

While the opportunity is exciting for both companies, General Motors is already feeling some backlash from its unionized employees.

In the aftermath of GM's 2009 bankruptcy, there were intense discussions around shedding Opel, but the automaker ultimately made a decision to retain its European operations whose engineering platforms undergird some of the vehicles that GM sells in the U.S. and other markets. The last time the vehicle maker turned a profit was back in 1999, losing nearly $15 billion (A$20 billion) over sixteen years.

"General Motors and PSA Group regularly examine additional expansion and cooperation possibilities, as well". But the unexpected loss past year has increased pressure on the company to find a solution in Europe.

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