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The potential takeover of Opel by France's Groupe PSA could have major ramifications for car manufacturing plants in Germany and the UK.

French car manufacturer Groupe PSA is seeking to acquire GM’s European subsidiary Opel, which includes UK automaker Vauxhall. However, political leaders in both Germany and the UK are concerned that the acquisition will produce domestic job losses.

In the past decade, Opel sales have fallen considerably. Since 2001, Opel’s associated brands have accrued €80bn in financial losses, according to the Financial Times. Opel’s decline has presented Groupe PSA – Europe’s second largest car producer in terms of sales – with an opportunity to further expand its regional operations.  

Carlos Tavares, the chairman of Groupe PSA, has earned a ‘cost-cutter’ reputation within the auto industry, causing many to speculate that he will cut manufacturing jobs in peripheral markets such as Luton in the UK or Eisenach in Germany.

Most notably, UK prime minister Theresa May has demonstrated concern over the fate of existing Vauxhall manufacturing plants in the UK. Ms May is set to meet with Mr Tavares at the end of February to discuss the merger’s ramifications for the UK. Ms May’s involvement in the deal represents a growing trend of protectionism within the UK as well as her determination to attract post-Brexit foreign investment.

“The UK today [has been] cast in the role of acting as a protective hen for a depleted range of subsidiaries and publicly-traded entities,” said Peter Clark, a senior teaching fellow at University College London’s School of Management.

Likewise, German chancellor Angela Merkel has pleaded for the protection of an estimated 19,000 German manufacturing jobs reliant upon Opel production. After a meeting with Canadian prime minister Justin Trudeau in mid-February, Ms Merkel announced to reporters: “We will do everything we can politically to secure jobs and sites in Germany." 

In terms of the future, the UK and Germany are likely to be pushed into further competition, as each side attempts to persuade Groupe PSA to keep existing Opel manufacturing centres within each of their respective economies.

“The automotive industry already faces the question as to what extent access to the UK market will be given for German manufacturers’ post-Brexit, and vice versa,” said Martin Petrin, a commercial law lecturer at University College London.

This article is sourced from fDi Magazine
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