General Motors is all set to hand over the Opel/Vauxhall division to PSA. The deal will be announced by PSA at a joint press conference with GM in Paris. This deal will be a win-win situation for both the companies.
GM has worked as part of an alliance with PSA in Europe since 2012. Both the companies will benefit from the deal. At the same time, there are certain pitfalls in store too.
Looking at the bright side, the addition of Opel and Vauxhall will launch PSA into a higher position and place it behind Volkswagen in the competitive European markets. After the deal, the company will be able to spend research and development costs across a greater number of vehicles. So, the company might also be able to bring in new vehicles to its lineup, reported Auto Blog.
However, we should remember that GM was not able to make Opel and Vauxhall successful. So there is no guarantee that PSA will be able to turn it around. Also, it does not give the company any new access to markets like China or India. According to reports, this is because 70 percent of PSA and Opel business is done in Europe. And the market has been shrinking from more than a decade.
At the same time, GM has been in a bad shape from the last couple of years. It was unable to make profits in the European division. After the deal, the company will be able to focus on more profitable areas and future technologies. On the flip side, after Opel moves out, GM's business might get affected and the lineup will also be affected, reported Auto Breaking News.
One needs to wait and watch what the after effects of the deal will be. Right now, the companies have made a strategic decision and are going ahead with the deal.
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