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More consolidation expected

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Following last month’s acquisition of General Motors’ Opel and Vauxhall brands by France’s PSA Group – owners of Peugeot and Citroën – motor industry leaders expect other vehicle manufacturers to consider consolidation opportunities.

In reaction to the announcement of the deal, Sergio Marchionne, CEO of Fiat Chrysler Automobiles (FCA), said he expected Volkswagen to come knocking at his door since the PSA-Opel tie-up would threaten that company’s position as Europe’s largest vehicle producer.

However, Matthias Mueller, CEO of the Volkswagen Group, said Volkswagen had no interest in joining forces with FCA. “We focus on what we have to do to reach our strategic goals,” he said.

Within days of his statement – which was made at the Geneva International Motor Show – Volkswagen announced that a memorandum of agreement had been signed with Tata Motors Limited which would form the basis of a partnership in India to explore long-term strategic cooperation in clearly-defined fields.

According to Mueller, the goal of the alliance would be to bundle the expertise of each of the car manufacturers with a view to jointly developing vehicle components and, possibly, vehicle concepts.

Meanwhile, PSA’s buy-out of loss-making Opel and Vauxhall – which cost the company $2,2-billion (about R28,50-billion) – elevated the French group into second position behind Volkswagen in Europe’s production rankings.

Following the acquisition, chairman Carlos Tavares said he expected Opel and Vauxhall to be profitable by 2020, since the deal opened the way for substantial economies of scale and synergies in purchasing, manufacturing and research and development.

Tavares said PSA was preparing to make other acquisitions, including a bid for a stake in Malaysia’s Proton Holdings, a money-losing manufacturer that owns UK sports car brand Lotus.

If PSA managed to bring Opel to “an efficiency level that is equivalent to PSA’s today, we will be in a very good position to deal with prospective opportunities that could arise,” he said.

Carlos Ghosn, CEO of the Renault-Nissan-Mitsubishi Alliance, said he believed the industry would continue to move towards consolidation. “You’re going to see more and more players trying to gain in terms of scale. It’s logical because of all the investments we need to face,” he said in a TV interview.

Commenting on the PSA-GM deal, Mary Barra, CEO of General Motors, said the US company was pleased to have been able to give Opel/Vauxhall a new opportunity. “For GM, this represents another major step in the ongoing work that is driving our improved performance and accelerating our momentum.

“We are reshaping our company and delivering consistent, record results through disciplined capital allocation to our higher-return investments in our core automotive business and in new technologies.

“We believe this new chapter puts Opel and Vauxhall in an even stronger position for the long term and we look forward to our participation in the future success and strong value-creation potential of PSA through our economic interest and continued collaboration on current and exciting new projects.”

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