In another move to streamline its global operations, General Motors has agreed to sell its money-losing European brands Opel and Vauxhall to the French maker of Peugeot and Citroen cars for 1.3 billion euros ($1.38 billion).
The sale to PSA Group marks GM’s departure Europe after nearly a century of automaking in the region and create the second-largest European carmaker after Volkswagen. PSA and French bank BNP Paribas are also acquiring GM’s European financial arm for 900 million euros ($960 million).
Germany’s Opel and Britain’s Vauxhall have lost $22.4 billion over the past 17 years. GM has 38,000 European employees, with more than 18,000 Opel workers in Germany and 4,300 Vauxhall employees in the U.K .
“For GM, this represents another major step in the ongoing work that is driving our improved performance and accelerating our momentum,” GM Chief Executive Mary Barra said in a news release. “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.”
GM President Don Amman said he supported the deal because diverging consumer tastes and government regulations meant that vehicles produced for the European market would bear little resemblance to models GM was selling elsewhere.
The company previously tried to sell its European brands to a consortium during its bankruptcy reorganization in 2009 but abandoned the plan as it pressed on with trying to revive Opel.
According to Forbes, the sale of Opel and Vauxhall “could pave the way for GM to transition from being a manufacturer and marketer of cars in Europe to being a provider of mobility services.” The company has been testing self-driving Bolt cars in California.
For PSA, which was on the brink of collapse three years ago and forced in to a state-backed bailout, the deal is an “aggressive move,” The Financial Times reported. CEO Carlos Tavares said taking over the Opel brand would eventually help PSA sell more cars outside western Europe.