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Opel/Vauxhall News: PSA In Discussions With GM About Possibly Acquiring Opel

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PSA Group is in discussions with General Motors on various strategic initiatives, including the possibility of acquiring Opel/Vauxhall. The news was first broke by Bloomberg and Reuters early this morning as sources revealed the two were in talks about swapping the ownership of Opel. Since then, a spokesman for PSA Group confirmed the talks.

The maker of Peugeot, Citroen and DS cars 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."

The two automakers already share production of SUVs and commercial vans, a key remnant of a possible alliance between the two automakers back in 2013.

Why would GM sell Opel? Why is PSA Group interested in it? 

“I can see why GM may possibly seek to sell its European division, which hasn’t made money in many years. It is less clear why Peugeot would be interested in buying GM’s assets. The purchase would give them capacity in Germany, one of the most expensive countries to produce cars and would lead to excess capacity,” said George Galliers, an analyst with Evercore ISI.

For PSA Group, the purchase of Opel would give them access to Opel's engineering and electric-car tech, along with increasing their scale and cost savings from joint purchasing a source tells Bloomberg. 

Source: Bloomberg, Reuters


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So then were would the Buicks and Holdens come from?

Does that mean all that work would come back to the good ol USA?

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My take on this was shock at first but then a little more info appears to change the dynamic.

#1 you can not look at this as a product deal as it is more economic and labor.

Lets face it no matter how good GM makes the Opel it is a money looser due to labor and plant issues. Opel has been a big drain of money all along.

It is reported that GM would remain a partner but not the principal. I some how wonder with the change in ownership PSA can close plants and renegotiate contracts with the unions GM can not do.

I really do not see GM bailing on the global Buick/Opel/Vauxhall/Holden plans. While they may not own the whole thing they will own part of it and just put burden of dealing with the economics to PSA.  I have seen many companies do similar to clean house.

Also while GM may not have as much profit potential they really will lose less money since they have been years from profit and the outlook is little chance of near term profit.

Product wise I see little change but how business is done will change and as it is now that may not be a bad thing.

GM is like a guy hanging on a hot pipe 50 feet over a tank of sharks. He has a choice to hang on and burn his hand till they are useless to swim. Or he can drop now before his hands are burned useless and try to swim out of the pool before the sharks get him. Neither choice is great but you take the one that has the best odds.

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I have been watching this play out this morning. Buick and Holden would be impacted by this more than anyone else.  What about GM China? I do not know if I am favor of this as GM would have no role in Europe. Killing Pontiac and Oldsmobile solved what problem? 

I would rather there be some sort of joint venture and sharing of resources than a right out buyout of Opel.  GM would be smaller than it is now. There are too many ramifications in this.  Ford is one Ford globally as Volkswagen is too.  

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This seems odd to me.   Opel loses money because GM wants it to lose money.  So much R&D is coming out of Europe, but the other divisions are booking the profits from that R&D.  Swinging Opel from the red to the black is just a change in accounting practice. 

I would think that GM buying up PSA and then merging operations with Opel would make more sense in the grand scheme of things.  

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Drew, why should GM BUY PSA?

The auto market in Europe has too many brands and too much capacity given low and falling sales.  GM has been leaving unprofitable markets ever since Mary Barra has been CEO, which is a good thing.  The European market will be in an auto recession before we are here in the USA.  Even though a lot of R&D is in Europe, that is NOT where the $$$ is.  If and only if auto capacity were cut in half, the auto market would begin to fully recover from the the last eight or nine years.  Opel may have its place, but shuttering planes in Germany is extremely difficult, especially compared to the USA.  Better to let PSA and VW fight over a shrinking market than play (and lose $$) in this space.

As for killing Pontiac and Oldsmobile, the problem was that there were simply too many brands given a US market share of less than 30%.  If it was 1990 or earlier, both could be kept because they added to the bottom line.  I miss Olds but I have accepted that GM survival was more important, especially when GM ended Pontiac and Saab and Saturn and Hummer.  GM could not be what it was 25 years ago because of the Japanese and the Korean automakers period.  Same with MB, BMW and VW. 

CEO Barra understands something we all should be cognizant of: smaller and more profitable (and higher free cash flow) is better.  No need to be huge and lumber towards a possible liquidation. Remember what happened to Chrysler after 1998, and the current fate of FCA points to a long-term end.

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@riviera74 I believe Drew as do I see where you could bring in PSA, get the intellectual property rights and then close and consolidate Opel / PSA to have a strong Engineering division with some profitable auto's that are used across the company.

I agree with you that Europe is ready I think for a consolidation in the auto business. China will be the next place for consolidation as right now way to many auto companies there too.

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I think some of you forget GM used to own PSA. They sold them I believe in 2013.

If such a deal is made GM has made it clear they would still be a partner in this deal. The truth is it is the opposite of what it was where GM was the primary they would change places and own the minority but still a sizeable chunk.

I believe PSA being a true Euro company and also being a new owner will have leverage to do things about plants and labor GM already have their hands tied on.

Too many people will look at this as a product deal and it is everything but.

I expect that if this deal comes in we will see little change in GM product or plans for new models.

Something has to give as they can not continue to lose money. They do not want to lose money in Opel as they have made changed to help but they are limited to what they can do.

The thing today is not so much how big you are but how profitable and efficient you are. Like at a race track you can over drive the track and be slower or you can slow your lap and not over drive putting in a faster lap. It is the old go slow to go faster. It is all about efficiency.

The 1800 pound gorilla in the room is while GM profits are up and things are going pretty well they need better stock performance. In fact many Automakers really need better stock performance. This is part of why there is such a rush to autonomous cars as everyone see it as a way to use technology to drive their stock.

I think we need to really take a look at this with more info as it comes in but in the end while this is earth shaking in the headline I expect we will see little change in the products. Where they are built and who builds them may be the major change.

FCA is way over capacity but they have major trouble closing their euro plants do to rules and unions.

I see the sale as a reset for GM with out going though chapter 11 at Opel.

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I hate to see GM sell off Opel/Vaux, but not making profit since 1999 still has to burn their ass no matter the tax benefits here in the US. GM.. may be gearing up for new negotiations with IG Metall. Also the loss of Opel at this point will have little effect on Buick or Holden simply because the engineering on those products are GM's.. they are not property of Opel. Furthermore I'd put American engineering up against the European any day of the week.. especially now. The only real loss will be that of 1.1 Million cars. This will effectively put them behind Renault/Nissan, or make them #4... but even with that.. GM made $12 Billion last year AFTER a loss of almost $1B in Europe

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28 minutes ago, riviera74 said:

Drew, why should GM BUY PSA?

The auto market in Europe has too many brands and too much capacity given low and falling sales.  GM has been leaving unprofitable markets ever since Mary Barra has been CEO, which is a good thing.  The European market will be in an auto recession before we are here in the USA.  Even though a lot of R&D is in Europe, that is NOT where the $$$ is.  If and only if auto capacity were cut in half, the auto market would begin to fully recover from the the last eight or nine years.  Opel may have its place, but shuttering planes in Germany is extremely difficult, especially compared to the USA.  Better to let PSA and VW fight over a shrinking market than play (and lose $$) in this space.

As for killing Pontiac and Oldsmobile, the problem was that there were simply too many brands given a US market share of less than 30%.  If it was 1990 or earlier, both could be kept because they added to the bottom line.  I miss Olds but I have accepted that GM survival was more important, especially when GM ended Pontiac and Saab and Saturn and Hummer.  GM could not be what it was 25 years ago because of the Japanese and the Korean automakers period.  Same with MB, BMW and VW. 

CEO Barra understands something we all should be cognizant of: smaller and more profitable (and higher free cash flow) is better.  No need to be huge and lumber towards a possible liquidation. Remember what happened to Chrysler after 1998, and the current fate of FCA points to a long-term end.

I'm not saying they should, I'm just saying that it would make more sense that way around than this way around. 

Opel loses money only on paper.  Much of the best R&D for small cars and small engines comes out of GM Europe, and that R&D is spread globally.   If GMNA had to pay Opel a proper "licensing fee" for each 2.0T they sold, or each Encore.... if China had to pay a properly priced licensing fee for each Verano.... then Opel wouldn't be losing money. 

It's a financial shell game. 

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Just now, Drew Dowdell said:

I'm not saying they should, I'm just saying that it would make more sense that way around than this way around. 

Opel loses money only on paper.  Much of the best R&D for small cars and small engines comes out of GM Europe, and that R&D is spread globally.   If GMNA had to pay Opel a proper "licensing fee" for each 2.0T they sold, or each Encore.... if China had to pay a properly priced licensing fee for each Verano.... then Opel wouldn't be losing money. 

It's a financial shell game. 

So. What's the reason for this U think? Bluff for a different end game? Help from German Gov? Give Backs from Unions??? 

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10 minutes ago, Cmicasa the Great said:

So. What's the reason for this U think? Bluff for a different end game? Help from German Gov? Give Backs from Unions??? 

Pressure on the German unions, pressure on the German government.  Trying to impress our own administration.

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56 minutes ago, Drew Dowdell said:

Pressure on the German unions, pressure on the German government.  Trying to impress our own administration.

I agree with all except the "impress Admin." I see no relevant reason why GM would give up its European ops to impress "the Orange" as he himself has global ops as well.. that are subject to the ins and outs of doing business in said countries. 

I look at it as 

1) Pressure Unions

2) Pressure German and UK gov to give more subsidies and back them in pressuring unions

3) possibly just getting rid of headache of Brexit and its impact on EU

4) There is talk of GM possibly doing this to open the door to buying FCA.

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" Adding SUVs and boosting market share were not key topics when talking about Opel a few years ago. Not when Morgan Stanley’s Adam Jonas and his team had classified Opel as the “single biggest threat” to GM’s long-term survival. According to their estimates, Opel and its UK sibling, Vauxhall, already had lost

$16 billion in the previous dozen years and would bleed $1 billion more each year on average into the 2020s. "

http://europe.autonews.com/article/20160131/ANE/160129856/how-opel-ford-will-make-europe-a-reliable-profit-source-after-years

http://www.ien.com/operations/news/20852087/gm-may-have-buyer-for-moneylosing-opel

Last year, Opel was a money loser to the tune of $.257Billion 

Sell the perpetual money pit 

 

 

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44 minutes ago, FordCosworth said:

" Adding SUVs and boosting market share were not key topics when talking about Opel a few years ago. Not when Morgan Stanley’s Adam Jonas and his team had classified Opel as the “single biggest threat” to GM’s long-term survival. According to their estimates, Opel and its UK sibling, Vauxhall, already had lost

$16 billion in the previous dozen years and would bleed $1 billion more each year on average into the 2020s. "

http://europe.autonews.com/article/20160131/ANE/160129856/how-opel-ford-will-make-europe-a-reliable-profit-source-after-years

http://www.ien.com/operations/news/20852087/gm-may-have-buyer-for-moneylosing-opel

Last year, Opel was a money loser to the tune of $.257Billion 

Sell the perpetual money pit 

 

 

Again, it's an accounting shell game.  Opel is a major R&D center for GM and the products resulting from that R&D are sold globally. 

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3 hours ago, Drew Dowdell said:

I'm not saying they should, I'm just saying that it would make more sense that way around than this way around. 

Opel loses money only on paper.  Much of the best R&D for small cars and small engines comes out of GM Europe, and that R&D is spread globally.   If GMNA had to pay Opel a proper "licensing fee" for each 2.0T they sold, or each Encore.... if China had to pay a properly priced licensing fee for each Verano.... then Opel wouldn't be losing money. 

It's a financial shell game. 

Worldwide, Ford does the same thing you state with Ford of Europe. 

And they are not going on 2 straight decades of losses.

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Drew is right as this is an end around to get breaks in Germany from the government and Unions like I stated earlier. 

PSA is a Euro company from France and has special consideration from other countries in European Union. 

Germany is a bastard to do business in anymore and they have rejected GM's attempts for breaks. The Unions are worse than the UAW at their toughest.  Give control to the French and they can deliver like Lafayette did to Washington.

GM is still going to MFG and engineer these cars as the French know better than to do it themselves outside the Diesels.

We see things like this happen in this country in a way. Often trucking companies will close down and sell out to a new buyer. Yet they reopen with the same drivers in the same building and the same trucks. The also get breaks from cities to remain and they get a new cut deal with the unions.

What GM is doing here is not a sure thing to work but they got nothing to lose.

PSA and GM have had a good relation for years when GM owned them. Also they sold their control of part of them before.

I see GM getting what they need better deals and I see PSA getting needed capital with more income and at some point GM will regain their share back. It is a win win for both companies if it works out. As it is both are losing money.

As for Buick and Holden they will go on just as they have under GM control with cars engineered by Opel.

Too often socialistic governments will drive companies into the ground. We saw it in England and now in Germany. They get heavy handed to the point they drive out business or break them as they see them as evil and then everyone suffers. California is doing just this to many companies and that is why they are leaving. That is also why half of California is now in Colorado and Oregon. 

At least most here are getting to this same conclusion but on other web sites they are about to bust a blood vessel and thin Mary is the devil incarnate. They are really out in left field as they thing this is all about product and neglect the government and labor end. 

Lets put it this way GM has little option here as if they let Opel fail Germany will not bail them out. 

This is why companies in America file for bankruptcy. It is not a failure so much in many cases as it is a reset. 

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A major difference in the US corporate environment and Europe's corporate environment is bankruptcy law.  Here you can reset (see GM in 2009 and its use of Section 363); in Europe bankruptcy tends to mean liquidation and a whole LOT of lawsuits since BK is about revenge not just money.

If it is as bad as hyperv6 says it is for the people of Europe to think this way (i.e. excessive socialism AND a ridiculous sense of entitlement from corporate Europe), then much of corporate Europe should move a whole lot of their operations (not just a few factories) to the USA to save a whole lot of bother.  I doubt they will (unless Congress and the current administration end corporate taxation).  If I were running a European multinational, I would certainly consider a move to the USA as a lower-cost, less-regulated place to do any and all business and let the Old World deal with the consequences of no jobs and a very nasty recession to go along with the BK of their socialism and their governments.

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5 hours ago, FordCosworth said:

Worldwide, Ford does the same thing you state with Ford of Europe. 

And they are not going on 2 straight decades of losses.

I see what you mean here. What GM needs to do to me is consilidste brands and actually be more like Ford in the sense that they don't have as many brands already costs around more and more. Why not try and get rid of some of the EU brands and use more Chevy/Buick/GMC OR vise Vera's and use Opel here. Use their own version of OneFord. While tacky, it's effective. 

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13 minutes ago, ccap41 said:

I see what you mean here. What GM needs to do to me is consilidste brands and actually be more like Ford in the sense that they don't have as many brands already costs around more and more. Why not try and get rid of some of the EU brands and use more Chevy/Buick/GMC OR vise Vera's and use Opel here. Use their own version of OneFord. While tacky, it's effective. 

They already tried Chevrolet in Europe, it failed.   Opel/Vauxhall have been the European GM brands for so long that I couldn't see them changing names..

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11 hours ago, Drew Dowdell said:

This seems odd to me.   Opel loses money because GM wants it to lose money.  So much R&D is coming out of Europe, but the other divisions are booking the profits from that R&D.  Swinging Opel from the red to the black is just a change in accounting practice. 

I would think that GM buying up PSA and then merging operations with Opel would make more sense in the grand scheme of things.  

Well, letting play around with Opel while they work in other places to make money might not be a bad idea. If GM continues some of the current successes at the moment, I could see them picking up PSA down the road....

Would make sense if they plan not to worry about Europe and work on other markets instead....

3 hours ago, hyperv6 said:

Drew is right as this is an end around to get breaks in Germany from the government and Unions like I stated earlier. 

PSA is a Euro company from France and has special consideration from other countries in European Union. 

Germany is a bastard to do business in anymore and they have rejected GM's attempts for breaks. The Unions are worse than the UAW at their toughest.  Give control to the French and they can deliver like Lafayette did to Washington.

GM is still going to MFG and engineer these cars as the French know better than to do it themselves outside the Diesels.

We see things like this happen in this country in a way. Often trucking companies will close down and sell out to a new buyer. Yet they reopen with the same drivers in the same building and the same trucks. The also get breaks from cities to remain and they get a new cut deal with the unions.

What GM is doing here is not a sure thing to work but they got nothing to lose.

PSA and GM have had a good relation for years when GM owned them. Also they sold their control of part of them before.

I see GM getting what they need better deals and I see PSA getting needed capital with more income and at some point GM will regain their share back. It is a win win for both companies if it works out. As it is both are losing money.

As for Buick and Holden they will go on just as they have under GM control with cars engineered by Opel.

Too often socialistic governments will drive companies into the ground. We saw it in England and now in Germany. They get heavy handed to the point they drive out business or break them as they see them as evil and then everyone suffers. California is doing just this to many companies and that is why they are leaving. That is also why half of California is now in Colorado and Oregon. 

At least most here are getting to this same conclusion but on other web sites they are about to bust a blood vessel and thin Mary is the devil incarnate. They are really out in left field as they thing this is all about product and neglect the government and labor end. 

Lets put it this way GM has little option here as if they let Opel fail Germany will not bail them out. 

This is why companies in America file for bankruptcy. It is not a failure so much in many cases as it is a reset. 

Yep-my other thought if things go south there.....

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1 hour ago, riviera74 said:

A major difference in the US corporate environment and Europe's corporate environment is bankruptcy law.  Here you can reset (see GM in 2009 and its use of Section 363); in Europe bankruptcy tends to mean liquidation and a whole LOT of lawsuits since BK is about revenge not just money.

If it is as bad as hyperv6 says it is for the people of Europe to think this way (i.e. excessive socialism AND a ridiculous sense of entitlement from corporate Europe), then much of corporate Europe should move a whole lot of their operations (not just a few factories) to the USA to save a whole lot of bother.  I doubt they will (unless Congress and the current administration end corporate taxation).  If I were running a European multinational, I would certainly consider a move to the USA as a lower-cost, less-regulated place to do any and all business and let the Old World deal with the consequences of no jobs and a very nasty recession to go along with the BK of their socialism and their governments.

Taxes here have been too high to move it all here but that is a door that could be opened. 

Spain is going bankrupt and Greece has been in trouble. 

England is tired of bailing others out with no say. France is not setting the world on fire. 

There will be a time the Germans will tire of Merkle. The question is how tapped out will The be as they have really been the only solvent country. With the large run of incoming refugees and a sluggish economy it will not get better soon. If they are forced to bail out any others it will only hurt them more.

I agree the timing is right to poach companies to come here and work with them. The only real problem here is just work ethic. We can not get people to show every day or pass a simple drug test. 

We have a hard time even with good paying positions to get people that do not loose their job from missing too much time or getting nabbed in a very basic drug test. Keeping in mind these are the ones who could pass the background test due to the need to handed sensitive information.

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2 hours ago, Cubical-aka-Moltar said:

They already tried Chevrolet in Europe, it failed.   Opel/Vauxhall have been the European GM brands for so long that I couldn't see them changing names..

Then they need to try harder.. try something that Europe and US both like. It seems to work for everybody else. 

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PSA may try to use this purchase as a means to come back into the North American market.  Also, Europe does not have Chapter 11 BK in the same way that the U.S. does.

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On 2/15/2017 at 10:48 AM, ocnblu said:

 

Back on Topic, This is an interesting thought about PSA and GM. We could see the start of consolidation and hopefully a clean up of the over capacity in Europe.

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    • By William Maley
      Opel is undergoing a major product overhaul as it begins to transition over from General Motors architectures to PSA Group. Some products will not make the change, however.
      Yesterday, Opel announced that the Adam city car, Cascada convertible, and the KARL city car will end production at the end of 2019. The company blames new emission rules for the canceling of these models, but some suspect the low-margin on these vehicles is what ultimately led to their demise.
      "In order to contribute to the CO2 compliance and to focus on high volume segments, the Opel ADAM, KARL and Cascada will not be replaced after the end of their life cycles, but will remain on sale until the end of 2019," the company said in a statement.
      This announcement has some wondering about the future of Buick's Cascada. A spokesman for the brand told Automotive News that Buick "not confirming anything at this point" regarding the brand's plans for the Cascada. Although, AN's Future Product Pipeline reports that the Buick version could be discontinued sooner than later.
      On the flipside, Opel will be launching eight all-new or refreshed vehicles beginning early next year. This will include a new Corsa subcompact and replacement for the Mokka X (what we know as the Buick Encore).
      Source: Reuters, Automotive News (Subscription Required), Opel


      Opel to Launch Eight All-New or Refreshed Models by 2020
      Stronger customer orientation and dealer performance Focus on high volume and high growth segments with three key launches by 2020: all-new Corsa, Vivaro and Mokka X successor Ensure CO2 compliance with state-of-the-art technology: four electrified vehicles by end of 2020; 100 percent electrification by 2024; further improved combustion engines Rüsselsheim.  Opel is continuing to execute the PACE! plan product offensive to meet customer needs and ensure compliance with the drastic Europe-wide CO2 guidelines which become effective in 2020. The future portfolio will ensure a sustainable, successful future for both the company and its dealer network. From early 2019 to the end of 2020, the company will launch eight all-new or refreshed models, investing primarily in high-volume and profitable segments. By then, Opel will be offering one of the newest portfolios of all volume manufacturers.
      With its PACE! plan, Opel has clearly committed to bringing at least one all-new model onto the market every year. In 2019 alone, Opel will launch the new generation of the bestselling Corsa and the successor to the successful Vivaro as LCV and passenger car variants. Additional variants and equipment versions of the Combo will also be on sale, thus significantly renewing the LCV portfolio. The successor to the hugely popular Opel Mokka X will follow in 2020 and will play a pivotal role for the strategy to expand the proportion of the company’s SUV sales from 25 to 40 percent by 2021.
      “Opel goes electric” was one of the commitments made by the company in November 2017 as part of its PACE! plan. Order books for both the all-electric new five-seater Corsa and the Grandland X PHEV which will be produced in Eisenach will be open by the summer of 2019. By the end of 2020, Opel will have a total of four electrified models on offer, providing a lot of driving pleasure and transforming e-car demand from niche to volume. By 2024, there will be an electrified version of every Opel model. Opel will make highly interesting offers, both technically and economically, and will democratise electro-mobility while further improving its combustion engines.
      In order to contribute to the CO2 compliance and to focus on high volume segments, the Opel ADAM, KARL and Cascada will not be replaced after the end of their life cycles, but will remain on sale until the end of 2019. With the new portfolio, Opel will continue to cover around 80 percent of the mainstream market volume in 2020 – with significantly higher efficiency and customer-orientation while simultaneously reducing complexity.
      “In a context of drastic CO2 norms, it’s our responsibility to shape a sustainable future for our company and our dealers with a highly competitive portfolio for passenger and light commercial vehicles. Opel will offer fun to drive and emotionally designed models including highly competitive light commercial vehicles such as the new Combo and Vivaro. The customers will benefit from the broad introduction of innovative technologies and affordable electrification,” said Opel CEO Michael Lohscheller. “The most recent awards – like the IVOTY 2019 for our Combo – demonstrate that we are on the right path.”
      The German manufacturer with almost 120 years of automotive tradition is leveraging Groupe PSA platforms and innovative propulsion technologies for all new models. Opel has impressively demonstrated its efficiency this year: the entire portfolio was and is fully available from dealers in time for the transition to the new Worldwide Harmonized Light Vehicles Test Procedure standard (WLTP). Moreover, Opel is already fully ready for the new Euro 6d-TEMP emissions standard and offers 127 passenger car models that meet the requirements which will come into effect for all new registrations in September 2019. “Our commitment to Euro 6d-TEMP is part of our strategy to become a leader in the reduction of vehicle emissions and a key pillar of our customer-centric approach. Whoever buys a new Opel now must not fear a city driving ban from today’s perspective,” said Lohscheller.

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