Peugeot buys Opel

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France’s PSA Group (Peugeot and Citroen) has agreed to buy Opel (and its British brand Vauxhall) from General Motors for an eye-watering $2.3 billion, creating a new European car giant to challenge market leader Volkswagen group.

High finance such as this leaves me breathless. Opel has recorded 16 years of accumulated losses, but is still worth $2.3 billion?

However, PSA is confident that it can get rid of the red ledger entries and are talking about an operating margin of 2 percent within three years and 6 percent by 2026 underpinned by 1.7 billion euros in joint cost savings. (High finance-speak for retrenchments.)

PSA shares jumped as much as 5.2 percent after Chief Executive Carlos Tavares said GM’s European arm could be turned around using lessons from the French group’s own recovery.

Now where that puts Australia’s Holden I am not sure, as it was going to market Opels as Holdens, now that GMH shut the Holden factory in Australia.