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.
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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.
Adbrands Weekly Update 16th Feb 2017: General Motors is considering an exit from the European car market. The US group is in talks with PSA Peugeot Citroen of France over the potential sale of GM's long-suffering European division Opel, which also includes UK brand Vauxhall. A combined PSA-Opel would become Europe's second largest carmaker after Volkswagen, overtaking Renault. The advantages for PSA would be greater scale, improved manufacturing capabilities and electric car technology it doesn't currently have. For GM, the sale of Opel would finally draw a line under a longstanding drain on its resources, which has racked up average losses of $1bn a year for for the past 15 years. It has considered the sale of Opel several times before, most recently in 2009 when GM was itself teetering on the brink of bankruptcy. A deal was drafted with car parts manufacturer Magna, only to be cancelled shortly before signature by GM's new post-restructuring management team. A deal is by no means certain. In addition to competitive concerns, GM and PSA face several challenges in structuring a new arrangement, not least to appease the German government and Opel's workers, who were given no advance warning of a possible sale. Both fear heavy job cuts. GM CEO Mary Barra and Peugeot's Carlos Tavares have both gone to Germany to meet with managers, and representatives of the unions and the government.
Adbrands Weekly Update 7th April 2016: Keen to take advantage of the booming American car market, PSA Peugeot Citroen is planning a return to the US for the first time in 25 years. The French manufacturer pulled out of the US in 1992 citing fierce competition from Japanese manufacturers. CEO Carlos Tavares told investors the company would dip its toe back into the US in 2017 with a launch of a car-sharing service, similar to the one it runs in France in partnership with Bollore Group. If that works well it would hope to relaunch the Peugeot and or Citroen brands in the US in around 2020. Separately this week, the group officially changed its name from PSA Peugeot Citroen to PSA Groupe.
Adbrands Weekly Update 25th Feb 2016: French auto group PSA Peugeot Citroen reported its first net profit for five years as a result of a rigorous programme of cost-cutting and pricing increases introduced by CEO Carlos Tavares since 2014. Revenues were up 6% to €54.7bn, while attributable net income hot €899m, compared to a €706m loss the year before. Operating income from recurring business more than tripled.
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