GM’s Opel Division May Merge With Peugeot

GM’s Opel Division May Merge With Peugeot

In a second phase of the alliance General Motors and PSA Peugeot Citroën signed earlier this year, both automakers are exploring ways to combine their European operations in a joint venture.

Both automakers are looking for ways to help curb their losses in the declining European automotive market, with one option for GM’s Opel/Vauxhall unit to merge with PSA’s automotive operations in a joint venture. Other options that have been discussed include the sale of Opel to Peugeot, buying Peugeot’s automotive business, and even combining all of them into a new entity.

Sources say that a joint venture could net GM 30-percent stake along with a $10 billion investment into the new company. A 30-percent stake would allow GM to not have to consolidate Opel’s financial results, removing its biggest financial liability.

GM has lost approximately $16 billion in Europe over the last 12 years, while PSA is using up 200 million euros in cash each month and doesn’t expect to turn a profit until 2014.

[Source: Automotive News]