Just weeks after confirming it was in negotiations with French automaker PSA, the parent company of brands Citroen and Peugeot, General Motors said today that it has reached an agreement to sell its European division, Opel, for about $2.33 billion.
PSA's acquisition includes Germany-based Opel and British brand Vauxhall, as well as the European arm of GM Financial. GM will retain the rights to sell its other brands in Europe, although the automaker pulled Chevrolet out of the continent a few years ago and now sells a limited number of Cadillacs, Chevrolet Corvettes, and Chevy Camaros.
GM acquired Opel in 1931, but in more recent years the division has been consistently unprofitable. GM had tried to discard Opel during its 2009 bankruptcy and then again in 2012 it began an alliance with PSA. Opel was actually slated to break even last year, but turmoil around the United Kingdom's Brexit meant that it lost about $257 million due to currency fluctuations.
Over the last decade, GM has mainly used Opel as an engineering center for global products. It's unclear what this means for GM's global product portfolio in the long term since much of the development work for all sorts of vehicles was completed in Germany at Opel facilities. In particular, GM's Buick division has been reliant on Opel's lineup.
The move will make PSA the second largest European automaker after Volkswagen, news that could surprise some Americans given the firm doesn't sell any cars in the U.S. or Canada. PSA is jointly owned by French and Chinese interests. Until recently, PSA was also a major money loser, but CEO Carlos Tavares turned the brand around with some help from France's government and Chinese automaker Dongfeng.
PSA says it doesn't plan to close any of Opel's plants in Europe soon.