PSA Groupe says Opel cannot go on ‘burning cash for ever,’ insisting its proposed purchase of the General Motors subsidiary could create a European champion, but doubt continues to remain as to any future direction for its British arm, Vauxhall.
PSA CEO, Carlos Tavares, is in London today (24 February) holding talks with Unite union, general secretary, Len McCluskey, as well as British Secretary of State for Business, Greg Clark, with the Vauxhall workforces at the Ellesmere Port and Luton plants, especially keen to hear the outcome.
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“The opportunity is very simple – Opel has been making red ink for ten years and burning [around] EUR1bn (US$1.1bn) of cash every year,” said Tavares earlier this week in Paris. “It is a German and European company – we believe there is opportunity to create a European car champion resulting from the combination of a French and Germany company – without forgetting of course our UK friends with the Vauxhall brand.
“From the Opel perspective, this company needs help. Burning cash is not going to last for ever. This company is of course, a German car company and we believe given our track record by PSA, we can help. In many markets of the world we have customers – despite all the progress we have made – [who] do not consider French brands.
“We may think it is unfair – it is just a reality. They will consider German brands based on the halo effect of the German premium brands. We want to keep this company German. In a speedy way we can implement significant synergies – the amount of synergies and the speed is quite high. The value creation is from the speed.
“I am not crazy. I would not be in this process if I did not have the support of my supervisory board.”
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By GlobalDataEarlier this week as well, British Prime Minister, Theresa May discussed the issue of Vauxhall with the PSA chief, stressing the important nature of the plants to the UK economy and the desire of both parties to protect jobs at Ellesmere Port and Luton.
“The Prime Minister reiterated the government’s commitment through our modern industrial strategy to creating and supporting the right conditions for the UK automotive industry to go from strength to strength, now and into the future,” noted comments sent to just-auto from May’s office in London.
“A particular shared goal was strengthening the UK’s automotive supply chain. The Prime Minister and Mr Tavares agreed that they and the Business Secretary would remain in close contact as discussions progress to ensure UK interests continue to be at the forefront of any future deal.”
