Peugeot owner PSA to buy Opel, Vauxhall brands from General Motors

Groupe PSA, parent of Peugeot, Citroen and DS Automobiles car brands is reportedly in talks with American automobile giant General Motors for buying out latter's European business. In a deal that could have significant implications for the European automotive industry, PSA will buy out Opel brand which also owns the Vauxhall brand in the UK.

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"PSA confirms that it is exploring a number of strategic initiatives with GM with the aim of increasing its profitability and operating efficiency, including a potential acquisition of Opel," company spokesman Bertrand Blaise said, BBC reported.

If the deal gets through, PSA would overtake Renault to become the second-largest European carmaker, after Volkswagen. General Motors has not released an official statement on the new development. PSA previously confirmed it was in talks with General Motors but indicates its dealings with Opel and Vauxhall have recently centered on the possible expansion of current projects. This include: launching various models between the two car makers share common platforms and drivelines.

While an agreement could be reached in the coming weeks, PSA shares rose 4.9 per cent to 18.81 euro at 1:04 pm GM, which has controlled Opel for nearly 90 years, has been active in recent years for a co-operation with Peugeot in order to cut costs and improve profitability at Opel and Vauxhall. PSA and GM signed an agreement in 2013 in Europe that involved former taking a seven per cent stake in PSA. But it was not as successful as envisaged.

Sale of Opel, Vauxhall brands will not be a loss for GM. The company has reported a loss of $257m from its European operations last year. It is the sixteenth consecutive loss-making year for GM in Europe. Hence it is logical to do away with the loss-making brands.