General Motors has announced a deal to sell its money-losing European operations to the French maker of Peugeot and Citroen cars.
Announced early Monday, the agreement will create a new European autos giant, bringing the Opel and Vauxhall brands under the control of France’s PSA.
GM is also selling its European financial arm to PSA and French bank BNP Paribas ( BNPQF ). The combined value of the deals is about $2.3 billion.
The agreement removes a financial headache for GM ( GM ) — Germany’s Opel and Britain’s Vauxhall have lost $18 billion over the last 16 years. It will also make PSA Europe’s second biggest carmaker after Volkswagen ( VLKAY ).
But it raises questions about the fate of thousands of jobs in Europe, particularly in the U. K., where Vauxhall’s plants may find it even harder to compete once the country leave the European Union.
Savings = job cuts?
Brexit could lead to trade barriers between the U. K. and EU, disrupting supply chains, pushing up the cost of components and raising the price of cars.
GM has 38,000 European employees, with more than 18,000 Opel workers in Germany and 4,300 Vauxhall employees in the U. K.
The companies did not comment on jobs in their statements, but said they expect the combination of Opel and Vauxhall with Peugeot and Citroen to enable cost savings in manufacturing, purchasing and research and development.
Those savings are expected to reach €1.7 billion ($1.8 billion) a year by 2026, with a “significant part” delivered by 2020, they said.
PSA has recently turned around its own flagging fortunes in Europe. With the help of a big investment in 2014 from China’s Dongfeng Motors and the French government, it has gone from near-bankruptcy to large profits.
