Published: Sun, March 05, 2017
Markets | By Terence Owen

Spain 'well-placed' in potential Peugeot-Opel deal - economy minister

Spain 'well-placed' in potential Peugeot-Opel deal - economy minister

By acquiring Opel, the French group will leapfrog rival Renault (RENA.PA) to become Europe's second-ranked carmaker after Volkswagen (VOWG_p.DE) by market share.

General Motors and Europe's PSA Groupe, which has Peugeot, Citroen and other vehicle brands, are edging closer to a deal that could potentially vault the French company into second place among automakers in Europe.

Both GM and PSA, which owns the Peugeot and Citroen brands, declined to comment.

But in recent years the firm has booked repeated losses, costing Detroit-based GM around $15 billion (14 billion euros) since 2000.

Regardless of the details, PSA will have its work cut out with Opel that not only has many products competing with its own brands, but also comes with low profit margins making cars in countries with high labor costs, including Germany, the United Kingdom and Spain, as well as a surplus of production. Separate briefings for the German press and Opel unions are expected to be held the same day.

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The deal "will be sealed on Monday morning in France and in Germany", the source said, adding that both sides "were very enthusiastic and satisfied".

But the "non-compete" issues were finally resolved as GM agreed to inject "substantially more" into the pensions than the $1 billion to $2 billion it had initially offered, another person said. GM, on the other hand, is happy to see Opel go after losing the company money for the last 16 consecutive years.

PSA chairman Carlos Tavares last month said that he hopes to create a "European auto champion" with the combination and pledged to work with governments and unions that are anxious about job cuts. Reuters says there were sticking points about $10 billion in Opel pension liabilities, and also about whether Opel-once under PSA ownership-would be allowed to compete against Chevy in China.

"It was also heartening to hear that PSA group wants to work with Unite and recognises the skill and efficiency of our members who make the world class Astra and Vivaro vans".

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