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    William Maley

    Its Official! PSA Group To Buy Opel and Vauxhall In $2.3 Billion Deal

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      Opel and Vauxhall say goodbye to GM and hello to PSA Group


    It is now official. This morning, PSA Group has agreed to buy Opel and Vauxhall from General Motors for 2.2 billion euros (about $2.3 billion). The deal is comprised of a 1.8 billion euros ($1.9 billion) payment for Opel and Vauxhall, along with a stake in Opel's financing arm. This makes PSA Group the second-largest automaker in Europe.

    “It gives us the opportunity to become a real European champion. Our plan is to build a common future for Opel and Vauxhall and fix the existing issues,” said PSA Chief Executive Officer Carlos Tavares.

    Those existing issues include Opel and Vauxhall never breaking even for GM. Over the past two decades, Opel and Vauxhall have lost almost $20 billion. In 2016, the division was projected to break even, but the complications of Great Britain leaving the EU meant they posted a loss of $257 million.

    "The way I look at this is positioning Opel-Vauxhall to be incredibly successful in the future," said GM CEO Mary Barra when asked by a reporter if she was relieved about the sale of Opel and Vauxhall. 

    "General Motors doesn't have to be relieved. They can be proud of giving Opel-Vauxhall a better future," said Tavares.

    PSA Group is aiming to make Opel and Vauxhall profitable once again, with operating profit targets of 2 percent in 2020 and 6 percent by 2026. These targets will be reached by joint cost savings of 1.7 billion euros (about $1.8 billion) by spreading the costs of developing new vehicles and sharing purchasing costs.

    General Motors won't be fully cutting its ties with Opel and Vauxhall for the time being. GM has allowed PSA Group to license technology rights to keep selling current models (including the upcoming Insignia) until they transition onto PSA platforms. According to Reuters, the next-generation Opel/Vauxhall Corsa will be the first PSA developed model. GM will also collaborate with PSA on various projects such as hydrogen fuel cells. Finally, GM will pay PSA 3 billion euros ($3.18 billion) to settle transferred pension obligations.

    But there are still a number of unanswered questions with this deal. The big one deals with job cuts and plant closures. With this deal, PSA group will add roughly 38,000 workers and 10 production facilities. Some analysts believe that PSA Group will close two to three plants within the next five years, with the possibility of those closures taking place in Great Britain due to Brexit. Taveres has said that the automaker would honor existing labor agreements and closing plants is a “simplistic” solution.

    “We don’t need to shut down plants,” said Tavares.

    Second is what will happen for Buick and Holden when models they share with Opel transition to PSA platforms. Both Buick and Holden will be getting the next-generation Insignia as the Regal and Commodore. Buick also gets the Opel Mokka to sell as the Encore, while Holden sells the Astra compact.

    Finally, there is the question about PSA Group's plans to re-enter the U.S. How does the purchase of Opel and Vauxhall affect their plans?

    Source: Bloomberg, Reuters, Automotive News (Subscription Required), General Motors, PSA Group
    Press Release is on Page 2


    Opel/Vauxhall to join PSA Group

    • Establishes PSA Group as #2 in Europe. This strong and balanced presence in its home markets will serve as the basis of profitable growth worldwide
    • Joint venture in auto financing with BNP Paribas to support development of Opel/Vauxhall brands
    • €2.2 Bn transaction advances GM’s transformation and unlocks shareholder value through disciplined capital allocation

    Detroit and Paris – General Motors Co. (NYSE:GM) and PSA Group (Paris:UG) today announced an agreement under which GM’s Opel/Vauxhall subsidiary and GM Financial’s European operations will join the PSA Group in a transaction valuing these activities at €1.3 Bn and €0.9 Bn, respectively.

    With the addition of Opel/Vauxhall, which generated revenue of €17.7 Bn in 20161, PSA will become the second-largest automotive company in Europe, with a 17% market share2.

    Creates sound European foundation for PSA to support its worldwide profitable growth

    “We are proud to join forces with Opel/Vauxhall and are deeply committed to continuing to develop this great company and accelerating its turnaround,” said Carlos Tavares, chairman of the Managing Board of PSA. “We respect all that Opel/Vauxhall’s talented people have achieved as well as the company’s fine brands and strong heritage. We intend to manage PSA and Opel/Vauxhall capitalizing on their respective brand identities. Having already created together winning products for the European market, we know that Opel/Vauxhall is the right partner. We see this as a natural extension of our relationship and are eager to take it to the next level.”

    “We are confident that the Opel/Vauxhall turnaround will significantly accelerate with our support, while respecting the commitments made by GM to the Opel/Vauxhall employees,” continued Mr. Tavares.

    Advances GM’s Transformation and Unlocks Value

    “We are very pleased that together, GM, our valued colleagues at Opel/Vauxhall and PSA have created a new opportunity to enhance the long-term performance of our respective companies by building on the success of our prior alliance”, said Mary T. Barra, GM chairman and chief executive officer.

    “For GM, this represents another major step in the ongoing work that is driving our improved performance and accelerating our momentum. We are reshaping our company and delivering consistent, record results for our owners through disciplined capital allocation to our higher-return investments in our core automotive business and in new technologies that are enabling us to lead the future of personal mobility.

    “We believe this new chapter puts Opel and Vauxhall in an even stronger position for the long term and we look forward to our participation in the future success and strong value-creation potential of PSA through our economic interest and continued collaboration on current and exciting new projects,” Ms. Barra concluded.

    Strengthens Each Company for the Long Term

    The transaction will allow substantial economies of scale and synergies in purchasing, manufacturing and R&D. Annual synergies of €1.7 Bn are expected by 2026 – of which a significant part is expected to be delivered by 2020, accelerating Opel/Vauxhall’s turnaround. Leveraging the successful partnership with GM, PSA expects Opel/Vauxhall to reach a recurring operating margin3 of 2% by 2020 and 6% by 2026, and to generate a positive operational free cash flow4 by 2020.

    PSA, together with BNP Paribas, will also acquire all of GM Financial’s European operations through a newly formed 50%/50% joint venture that will retain GM Financial’s current European platform and team. This joint venture will be fully consolidated by BNP Paribas and accounted under the equity method by PSA.

    The transaction is another step in GM’s ongoing work to transform the company, which has delivered three years of record performance and a strong 2017 outlook, and returned significant capital to shareholders. It will strengthen GM’s core business, support its continued deployment of resources to higher-return opportunities including in advanced technologies driving the future, and unlock significant value for shareholders.

    By immediately improving EBIT-adjusted, EBIT-adjusted margins and adjusted automotive free cash flow and de-risking the balance sheet, the transaction will enable GM to lower the cash balance requirement under its capital allocation framework by $2 Bn, which it intends to use to accelerate share repurchases, subject to market conditions.

    GM will also participate in the future success of the combined entity through its ownership of warrants to purchase shares of PSA. GM and PSA also expect to collaborate in the further deployment of electrification technologies and existing supply agreements for Holden and certain Buick models will continue, and PSA may potentially source long-term supply of fuel cell systems from the GM/Honda joint venture.

    Additional Information

    Terms of the Agreement

    Opel/Vauxhall automotive operations will be acquired by PSA for €1.3 Bn. GM Financial’s European operations will be jointly acquired by PSA and BNP Paribas for 0.8 times their pro forma book value at the closing of the transaction, or approximately €0.9 Bn.

    The transaction has a total value of €2.2 Bn, for Opel/Vauxhall automotive operations and 100% of GM Financial’s European operations.

    The transaction value for PSA, including Opel/Vauxhall and 50% of GM Financial’s European operations, will be €1.8 Bn.

    In connection with this transaction, GM or its affiliates will subscribe warrants for €0.65 Bn. These warrants have a nine-year maturity and are exercisable at any time in whole or in part commencing 5 years after the issue date, with a strike price of €1. Based on a reference price of €17.34 for the PSA share5 , the warrants correspond to 39.7 MM shares of PSA, or 4.2% of its fully diluted share capital6. GM will not have governance or voting rights with respect to PSA and has agreed to sell the PSA shares received upon exercise of the warrants within 35 days after exercise.

    The transaction includes all of Opel/Vauxhall’s automotive operations, comprising Opel and Vauxhall brands, six assembly and five component-manufacturing facilities, one engineering center (Rüsselsheim) and approximately 40,000 employees. GM will retain the engineering center in Torino, Italy.

    Opel/Vauxhall will also continue to benefit from intellectual property licenses from GM until its vehicles progressively convert to PSA platforms over the coming years.

    In connection with the transaction, GM will take a primarily non-cash special charge of $4.0-4.5 Bn.

    Ongoing Pension Fund Commitments

    All of Opel/Vauxhall’s European and U.K. pension plans, funded and unfunded, with the exception of the German Actives Plan and selected smaller plans will remain with GM. The obligations with respect to the German Actives Plan and these smaller plans of Opel/Vauxhall will be transferred to PSA. GM will pay PSA €3.0 Bn for full settlement of transferred pension obligations.

    Closing Conditions

    The transaction is subject to various closing conditions, including regulatory approvals and reorganizations, and is expected to close before the end of 2017.

    Warrants

    The issuance of the warrants is subject to the vote of shareholders at PSA’s General Meeting of May 10th, 2017. The three main shareholders of PSA (the French State, the Peugeot family and DongFeng) representing in aggregate 36.6% of the share capital and 51.5%7 of the voting rights of PSA have undertaken to vote in favor of the resolution related to the issuance of the warrants to GM. In the event the warrant issuance reserved to GM and its affiliates is not approved by PSA’s General Meeting, PSA will settle the €0.65 Bn in cash over five years.

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    The Opel and PSA deal is done.  Opel is Sold!
     
     

    PSA Deal to Buy G.M.’s Opel and Vauxhall Faces Political Winds:

     
     
     

    Vauxhall-Opel sold by GM to Peugeot-Citroen

     
     
     
     
    PSA agrees to buy Opel in $2.3 billion deal 
    PSA has agreed to buy Opel from GM in a deal valuing the business at 2.2 billion euros ($2.3 billion), the companies said on Monday, creating a new regional car giant.
     

     

     

     
    GM executives said they decided to sell Opel because Europe's changing geo-political and regulatory climate demands more investment at a time when they see a greater need to focus on North America, China and emerging technologies.
     
     

    GM sells Opel, Vauxhall to PSA: Here’s why it happened

    GM TO FOCUS ON NORTH AMERICA, CHINA AND EMERGING TECHNOLOGIES


     

     

     

     
     
    My thoughts:
     
    1. Now GM has to develop cars for every Opel they use now. That is half of Buicks and Holdens line up. 
    2. Focus on what in North America? They killed brands here(Saturn, Hummer, SAAB Pontiac and Oldsmobile)  and Chevrolet is sitting there with too many cars and suvs in its lineup.  That is why the SS did not sell because it was at the wrong brand.  GM needs to accept not everyone will buy a Chevrolet and how Chevrolet is seen by the buying public. 
    3. Cadillac is short on Suv's and crossovers and a flagship car above CT6.
    4. So what in America do they need to focus on??
    5. Questions:
     

    There have been some questions raised about the deal. Some observers wondered what it would mean for GM to no longer be a truly global company. And the loss of about 1.2 million annual sales could impact its broader economies of scale – potentially raising costs.

    Some Opel products are marketed in the U.S. under other GM brand names – the Buick Cascada convertible being one example – so GM will now have to develop replacements.

     
    6. GM is not in Europe any longer. So, they are not truly a global player. 
     
    7. This is the only benefit I see in the deal:
     
    If PSA can turn things around at Opel, it could pay off for GM in the long-run. It holds warrants to purchase shares of the French company.
     
    8. I am watching to see what happens to Holden and Buick and what role Holden will play now. 

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    Better to ditch Europe than be a global player when the European auto market implodes.

    As for Regency's points: Do we miss Pontiac? Sure.  GM does not simply for profit reasons.  The SS should have been the new Bonneville, but GM wasted Pontiac after 1985 or so.  Cadillac could use a better and larger CUV lineup and the CT8 to come out NOW rather than in the next three years.  As for developing Buicks and Holdens, let China do the heavy lifting since China is buying anything with a Buick logo on it.

    Lastly, ditching a LOT of European pension obligations is a GOOD thing.  The GM empire needs to shrink so that GM can actually survive if not thrive past 2030.

    • Upvote 1

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    It makes sense, GM doesn't make money in Europe, PSA does make money in Europe, and can consolidate Opel/Vauxhaul in and through platform and engine sharing, HR and financing sharing, etc, can keep this all profitable.  Makes PSA #2 in Europe, it makes sense for both sides.

    GM can build Buicks from Chevys, no big deal.  They Opel Buicks (or Opel Saturns) never sold well anyway.

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    As I said before.. the Opel/Vaux engineering is still GM engineering. I will add that the true benefit having them was specifically to cater to certain aspects of Euro market.. outside of that market their necessity drops. I will also add that in terms of chassis development, engines, styling, and quality control.. the NA hub has been spectacular in the last decade on its own. Those worried about shared Opel and Buick vehicles.. should fret not.. the Regal and Encore at least will still be offered as the would have been before this sale. Lastly.. GM might actually end up making more money in the next 2 years off of Opel/Vaux that they would have in 2020 due to the fact that PSA does have to pay them licensing. OH.. and that "Non-Compete" with Chevy markets includes U.S. and China from what I read

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      With the addition of the Jaguar E-PACE and the battery electric I-PACE, the New Generation of Jaguar lineup expands to seven models for the first time in the brand’s storied history, while new model derivatives like the Jaguar F-PACE SVR and the XF Sportbrake Prestige diversify the portfolio offering customers greater choice.
       
      For 2019 the Jaguar ‘PACE’ family of SUVs and crossovers has expanded since the debut of the
      F-PACE, the brand’s best-selling model. Last year, Jaguar introduced the E-PACE compact crossover, as well as the brand’s first-ever all-electric production car – the I-PACE, mid-size performance SUV.
       
      In addition to the ‘PACE’ family of SUVs and crossovers, the Jaguar brand includes the F-TYPE sports car, the  XE compact sport sedan, XF premium mid-size sedan, XF Sportbrake mid-size wagon and the brand’s luxury flagship – the full-size Jaguar XJ. Each model delivers segment leading driving dynamics, timeless design and the latest connected technologies.
       
      For added peace of mind, every new Jaguar vehicle comes with Jaguar EliteCare, a Best-in-Class ownership package1. This warranty is further expanded for Jaguar I-PACE customers covering the electric battery for 8-years / 100,000 miles and a 70 percent state of health2. Jaguar EliteCare coverage includes a New Vehicle Limited Warranty, Complimentary Scheduled Maintenance and 24/7 Roadside Assistance, each for 5-years or 60,000 miles, as well as Jaguar InControl® Remote & Protect™ connected services for 5-years and unlimited mileage.
       
      Jaguar Land Rover announced in 2017 that from 2020 all new, or significantly updated, models will incorporate some form of electrification either optional or as standard. The company will introduce a portfolio of electrified products across its model range in the coming years; embracing fully electric (BEV), plug-in hybrid (PHEV) and mild hybrid (MHEV) vehicles as well as continuing to offer ultra-clean gasoline and diesel engines
  • Posts

    • DRIVEN: 2020 Subaru Ascent Premium (AWD 2.4 turbo) HIGHS: -Finally, what the market was looking for, a worthwhile Subaru entry into the 3 row crossover segment.  And packaging, size wise, styling, just about perfect for Subaru -2.4 engine can snarl, nice go juice, and the CVT is actually fairly responsive.  Moves out well, or at least feels like it does.  Makes the Ascent feel sporty actually. -As mentioned above, packaging is just about perfect for Subaru.  It might be considered a tweener, but it does not feel hulking or girthy...and it still will be garagable for many of those folks that would shop import brands.  Cabin width not as wide as a Traverse, noticeably so...but conversely feels like a nice size upgrade from an Outback.  Maybe if you try to have three in the second row its a concern but otherwise should be ok.  Plenty of comfort remains and the third row is decent sized for leg room.  This may be the sweet spot size of a 3 row for many customers. -Cloth seats were attractive and did feel nice at the bottom. -Simple clean dash layout, noticeably signature Subaru.  Some interesting trim.   -Open and airy feel inside the cabin, and likewise visibility out.  In particular in front it doesn't feel significantly larger in front then a Forester or Outback. -Carlike ride and handling.  At least in line with the sort of current expectations of a Subaru / Toyota / Honda type of customer.  And reasonably quiet inside. -Nothing particularly egregious, and entirely in line with Subaru and Japanese car in general brand character.  If you are a Subaru fan, this is your manna, this should EXCITE you. LOWS: ...all that said (above) -A few times I caught the CVT with its pants down and it went into slow response / rubber bandy mode. -Dash, to me, did feel plain and basic (and that also is entirely in character for a Subaru).  I will go on record saying that a Traverse is nicer inside and much more interesting.  -Steering felt light and numb enough that I can't say it was anything besides decent.  All while being a huge upgrade in steering compared to other Subarus I have driven the last few years.  It is very much improved compared to those.  And the suspension was composed enough in the Ascent that it didn't bounce and bob and weave like I had when i drove a Forester before. -I didn't dissect the cargo area greatly but I do think maybe it is down a little bit in terms of usable dimensions compared to say, a Traverse or Atlas....probably as useful or more useful than an Acadia. -At the end of the day, apart from the kind of lively powertrain, the whole rest of the vehicle is MILQUETOAST.  Which, if you are a Subaru fan, should EXCITE you.  I mean, I think a Santa Fe may be more appealing emotionally.  I was expecting something to feed the soul here, there is nothing.  How they made it still feel lifeless while still miraculously making this vastly improved over other Subarus, must have required special skill. SUMMARY: At the end of the day, a perfectly innocuous but highly useful device that absolutely fulfills the Subaru brand character while at the same time borders on being something equal to the NPC version of an automobile.  And some will absolutely love that.  While superbly capable, I think I VASTLY prefer my GM's or even the VW Atlas.  Seek those out instead if you want ANY personality in your 3 row family hauler.        
    • DRIVEN: 2020 Ford Explorer XLT 2.3 Ecoboost 4WD   MSRP 39,770 HIGHS:  -Complete redesign is sharp looking in the flesh, while still familiar and identifiable as an Explorer at the same time -Size was not sacrificed in the redesign, the Explorer is still a nice large vehicle in a time where EPA pressures are forcing smaller vehicles. -New RWD architecture dramatically improves space efficiency and driving feel all at the same time.  That combination almost never has been able to exist before.  Truly a complete beneficial ground up redesign. -2.3 Ecoboost now mated to new 10 speed automatic has nice pep and verve for most drivers, sounds good and smooth and refined enough.  New 10 speed worked real well. -Wow, what a change in the view out the hood.  Short front end (how did they do that with a RWD chassis?) and it drops away from line of sight such that your view out the front is open and airy and very easy to see what is going on; really quite awesome as far as that goes.  Fairly good visibility back and sides for an SUV otherwise compared to some others. -LOTS of ergonomic and interior packaging improvements.  The front seats are now farther apart and give a feel of a wider cabin, partially due to much thinner doors.  The seats themselves, while a bit shy of support are typical Ford spacious for wide MUHRICAN bottoms.  Even the base cloth feels of good quality.  The new gauge cluster is very nice, big upgrade over typical Ford (and this the base cluster).  The touch screen is nicely located and responsive and good looking.  The climate controls are simple and nicely within reach.  There is a nice wide console / armrest and a handy slot for phone or pens right below the touch screen.  Easy and get in the rear two seats and move around the cabin.  What a nice change overall in interior environment from past Fords, while still easily feeling like a Ford. -Trunk behind third row has neat flip up for a lower, flatter floor for your grocery bags (like other competitors do).  Not as big behind row 3 as maybe some others, but overall cargo capacity seems just fine. -OK, RWD fans, yes this drives like a RWD vehicle...you feel pushed.  I am not used to that anymore but the feel is such that those who like the feel of RWD, here you go.  A big difference in feel between the 2019 and 2020. -Overall the chassis, ride, etc, the overall feel of the vehicle is that of a rugged, large, solid, sturdy ride.  And decent steering feel.  This does not feel completely like a truck or completely like a typical crossover SUV / car.  It is something inbetween and I think drivers who have been looking forward to this new RWD chassis will like this.  This vehicle feels like it would handle rural and rugged environments better than some other typical competitors.  Perhaps this also partly why this is Ford's new police vehicle. LOWS: -These new Fords coming out this year its been discussed that they may have cheap interior bits.  There is some of that going on here.  The door and dash plastics seem like they might be very thin and the graining I think would come off more expensive looking if the quality of the plastic were better.  We don't always expect much from Ford anyways for interior quality so this may not be terribly egregious anyways.  If i compare it to the Traverse, I don't think you can say the Ford has better interior material quality.  The Traverse IMO may still have the better interior. -The 2.3 engine while working for most people I think there will be plenty of folks drawn to the Explorer because of the RWD chassis, I might recommend they try the ST version with the high power v6....or the upcoming hybrid.  If you like this vehicle and plan to invest in one long term you might see payback in owner satisfaction by upping for the more powerful options.  I do think overall the feel of a six or even 8 cylinder motor would be more at home in this new ride. -While as i said above, that Ford did a good job with the design, it almost already feels old to me.  It is so familiar looking that while still looking new is actually a bit tough for average people to pick out next to the 2019 (which i drove side by side before this).  Color and model may help you get a unique looking Explorer, just keep that in mind.  I guess the evolutionary styling works for Subaru etc.   -Seats could have been more supportive IMO.  I just think automakers are paring away so much at every gram of weight that items like the seats keep getting pared down so they don't feel as solid as maybe they could. -Notice I said above RWD fans will probably like the ride and handling of the Explorer.  I think those that like something more carlike may not care for the somewhat trucky feel.  This will be personal preference.  In addition, the vehicle may feel too large to some.  Also, personal preference.  It felt heavy, not really agile or athletic. SUMMARY: A bellweather, a successful reinvention and repositioning of the Explorer more back to its roots and slightly a bit out of the mainstream of a crossover market segment it purposely worked to fit into with the previous generation.  With its reinvention, it is a breath of fresh air into what has turned into a 'me too' segment.  Still, apart from some typical Ford cheapness inside, this brand new design should sell like hotcakes and please old and new Explorer fans alike.  I see this design carrying on for 8-10 years and being a big profit center for Ford.  My own personal rating is a B+ for interior cheapness and as I prefer the carlike FWD feel of some of the competition, but overall I give big props to Ford for going back to what fits into the Explorer brand character in what will be a hugely successful new design.    
    • i think there is less room in the stinger than the optima Cadillac has become a trim level.  that approach may work, but i would like to see more high power offerings in their product line.. Cadillacs should not lean so much on the corporate 3.6 and now the 2.0 turbos.  The 2.7t is a nice choice for Ct4-v but then why not make it standard motor in the XT5, CT6, should be an alternate powertrain in XT4 also. After all this time, GM still doesn't update its products fast enough.
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