While last week’s Geneva motor show had many fascinating new cars on display, the biggest news from there was PSA Group’s acquisition of General Motors’ European arm. The parent company of Peugeot and Citroën has announced that it will take over General Motors’ Opel and Vauxhall brands as well as its finance operations in Europe for €2.2 billion (Dh8.6 billion). This purchase has catapulted PSA into the position of Europe’s second-largest automaker after Volkswagen Group.
However, if not taken forward with a clear strategy and some astute streamlining decisions over the next few years, this is a deal that could spell trouble for the company and for the continent’s automobile industry as a whole. And no one knows this better than PSA, which had made a similar purchase in the late Seventies with not-so-great consequences. In 1978, close on the heels of its acquisition of Citroën, Peugeot bought Chrysler’s European operations for a ridiculously nominal $1 (Dh3.67).
While it made the company Europe’s largest automaker at the time, Peugeot soon realised it had more on its plate than it could handle. Chrysler had absorbed brands like Simca and Rootes and managing the workforce and maintaining productivity and profitability at these various plants proved a challenge. Even rebranding all Chrysler models as Talbot didn’t help stop the steep slide in sales. It had to shut plants in England and Scotland and after recording a loss between 1980 and 1986, phased out the Talbot brand.
That purchase and the ensuing problems are among the biggest blotches in the French automaker’s history. One can only hope this new acquisition does not go the same way. After all, they’ve spent a couple of billion euros more this time around.