PSA Peugeot Citroen is one of France's biggest carmakers, and will regain its former position as the #2 in Europe following a shock deal to acquire GM's Opel and Vauxhall brands in 2017. Until recently PSA's traditional focus on its home market, as well as recurrent financial problems since the 1980s, had caused it to be overshadowed by domestic rival Renault. PSA attempted to kickstart international expansion through aggressive moves into Asia, Latin America and the Middle East, but sales remained doggedly flat for several years, hampered by a lack of new launches. A new management team was installed at the end of 2006 to break the group out of its rut, but the downturn in the economy did not help recovery, and the group announced an unexpected loss for 2008, resulting in another change of leadership. There was a modest improvement in performance for 2010, also the 200th anniversary of the Peugeot brand, but losses again the year after. That prompted the creation of a sourcing alliance with GM, also struggling in Europe. Although that project fell flat and was partially unwound only a year later at the American company's instigation, it was to sow the seeds of a much bigger deal a few years later. In the mean time, PSA's Chinese partner DongFeng Motors and the French state agreed in 2014 to provide much-needed cash to keep the business afloat. That return to financial stability allowed PSA to negotiate a dramatic new expansion to its portfolio in 2017, with an agreement to acquire GM's Opel and Vauxhall. It also subsequently made approaches, which were rebuffed, to Fiat Chrysler.
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Adbrands Daily Update 19th Mar 2019: In another slight to its longtime domestic rival, PSA raided Renault to recruit senior executive Thierry Koskas, named as SVP, global sales & marketing. Koskas takes over that role from Alberic Chopelin who is leaving to join Europcar. At Renault, Koskas was global marketing director, before being transferred to that group's racing division late last year.
Adbrands Daily Update 27th Feb 2019: How the tables have turned in the French car industry! As traditional local champion Renault battles to repair its relationship with partner Nissan, PSA Groupe - which had struggled for years with poor performance - reported its best ever set of results, bouyed up by the first full-year contribution from Opel Vauxhall. Revenues hit a record high of €74.03bn, while net income jumped by 40% to €3.30bn. CEO Carlos Tavares also reaffirmed plans to re-enter the US market for the first time since 1991, having spent the past three years re-engineering models to meet North American emissions standards. He said the timing of the launch would be announced once the current uncertainties over global trade have been resolved.
Adbrands Weekly Update 5th Apr 2018: Ads of the Week: "The Hitchhiker". Traction, Havas Group's new dedicated agency for Citroen, unveiled its first campaign, and it's a loving and lovely retrospective of some of the client's most celebrated vehicles. "Some", indeed, because, bizarrely, the car most indelibly associated with the Citroen name is missing from this trip down memory lane. The original, bizarre, almost frog-like Citroen DS, a French design classic of the mid-1950s, has been omitted, presumably because of parent group PSA's ill-conceived idea to spin off the DS line as a separate range a few years ago. Would it really have been too confusing to include it? It has far more resonance with most viewers than many of the cars that did make the final cut.
Adbrands Weekly Update 3rd Aug 2017: A new auto giant is born. PSA Groupe of France completed the acquisition this week of GM Europe, adding the Opel and Vauxhall brands to its stable alongside Peugeot, Citroen and DS. "We are witnessing the birth of a true European champion today," said PSA CEO Carlos Tavares. "We will assist Opel and Vauxhall’s return to profitability and aim to set new industry benchmarks together. We will unleash the power of these iconic brands and the huge potential of its existing talents. Opel will remain German, Vauxhall will remain British." PSA leapfrogs Renault to become the undisputed #2 in the European car market with around 17% regional share. Volkswagen still leads the pack with over 23% of new registrations, while Renault has 10.5%.
Adbrands Weekly Update 9th Mar 2017: It's a deal. In an end of an era moment, GM has agreed to sell its European automobile division, and associated financial services operations, to PSA Group of France, makers of Peugeot and Citroen. Rumours of negotiations first surfaced two weeks ago. PSA is paying a rock-bottom €1.3bn for the still-struggling Opel business in continental Europe and somewhat healthier Vauxhall unit in the UK. It's a bargain price for a business that generated sales of almost $19bn last year. Better still for PSA, only half of that sum is being paid now in cash, with the rest in warrants to acquire around 4.2% of PSA's equity in five years' time. PSA is teaming up with French bank BNP Paribas to acquire the finance business for an additional €900m in cash. The price is a measure of GM's eagerness to offload its European division, which has racked up losses of over $15bn in the past two decades. In addition, GM will take a charge of as much as $4.5bn to cover impairments and some of its European pension obligations. That's thought to include a €3bn payment to PSA to cover some of the shortfall in Opel's pension fund. On a net basis, therefore, GM is effectively paying PSA around €800m to take Opel off its hands. The sale will bring to an end GM's turbulent 90-year involvement in the world's third biggest car market, while also elevating PSA into the #2 spot in the region behind Volkswagen. The question is whether PSA, itself only now just around the corner after years of difficulties of its own, can make the deal work. It has promised to preserve Opel/Vauxhall's manufacturing commitments across Europe for five years, but at some point the axe might need to fall to improve profitability. PSA CEO Carlos Tavares also plans to make use of spare capacity at Opel's plants to boost exports beyond Europe, primarily into Latin America, North Africa and parts of Asia.
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