The $2.3 billion purchase of General Motors Europe (GME: Opel and Vauxhall) by PSA Peugeot Citroën is moving rapidly to its completion. On 5 July 2017, EU antitrust authorities approved the proposed acquisition. But complex issues remain in unraveling GM from Opel on intellectual property rights, and who gets what regarding engineering and design, IT and shared platforms. There's also the issue of GME shared models, notably the Opel/Vauxhall Insignia sold as the Buick Regal in the U.S., as well as plant and workforce rationalization.

What to expect when the smoke clears? SAE's European Editor Stuart Birch asked Dr. Paul Nieuwenhuis, co-director of the Center for Automotive Industry Research at Cardiff University, about the key aspects of the deal and their possible outcomes.

Q: Intellectual property rights (IPR) will presumably form a very significant element of the take-over discussions; how will this be achieved?

It is a complex and delicate area and much of it concerns suppliers. There’s not a lot they can do about PSA coming on the scene and in some situations OEMs can be quite heavy handed. But I feel in this instance it will be worked out on a case-by-case basis. There were some IPR issues when GM parted with Saab that required considerable negotiation. But I think with PSA there will be a happy ending. It is not in the interest of a supplier nor of PSA and GM for it not to work out.

There has been confirmation that the first priority is consolidating suppliers as much as possible to make savings from joint purchasing of higher volumes. However, there is also a requirement for Opel to return to profitability, which suggests it is going to be run as a separate division, at least initially. From similar cases, I don’t regard IPR it as having been a big issue. This take-over is a bit like Brexit: Everyone wants it to work so you make sure it does.

Q: What will PSA regard as the salient strengths of GME – design, technology, manufacturing capability? And apart from its U.K. plants, would Vauxhall just be regarded as an exercise in badge engineering?

Salient points will be production capacity and access to markets where PSA products are traditionally not in a strong position–like Germany! We don’t yet know how distinct PSA will keep the brands in the long term. Mechanically, products may be shared much as they are within the VW Group, which has with distinctive styling identities for some brands including SEAT in Spain and Skoda in the Czech Republic.

On the face of it, PSA and GME have competing ranges, so a lot of overlap. Much is made of this by some, but noting how PSA has been able to differentiate Peugeot and Citroën, I think if anyone can differentiate within similar segments, it is them. In addition, running three main brands in similar segments provides much greater scope for platform and component sharing.

Looked at from a French perspective the awareness of the Vauxhall brand is probably very close to zero. Until more recent years, Vauxhalls were a distinctive, U.K. product, but later models became more or less Opels with a different badge.

Q: Presumably platform and powertrain sharing will be one of the foundations on which the future will be built for both companies?

Yes. So the first thing would be to see where they can share suppliers and get some economies of scale on components. They’ll get through this phase by working with individual product groups. There is no reason to think we will not see an Opel with a PSA platform and vice versa. But we don’t yet know what Opel input there will be. Also, some Opel platforms (such as those for Buicks) will continue to be manufactured for some years.

PSA will also look at Opel expertise among its workforce: where their technology or business strengths are. As for electrification, France is now regarded as probably being ahead of any other country in Europe; Opel’s presence in that sector has mainly come from GM R&D in the U.S.

Q: Do you feel the individual brand signatures of each marque will be maintained and that each will continue to present its national identity?

I am sure that’s what they will try to do although Vauxhall may be an exception. PSA will want to maintain the Opel brand and may continue to use it to supply GM’s Holden in Australia, which soon will no longer build its own cars, as well as Buicks for the US...

Q: Production capacity of the new company will be considerable, which almost certainly means plant closures; what is your view on this and which are likely to be at particular risk?

Pre-Brexit, it looked possible that plants in the U.K. would be at risk, but post-Brexit it might be thought useful to have plants outside the European Union, for example it could make sending cars to Australia and to the U.S., easier.

So Brexit might work in the new company’s favor. But then we have to consider the situation regarding components supplies from countries such as France and Germany possibly being subjected to import tariffs. Also, delivery trucks might face border control delays, so just-in-time delivery may be affected and that would mean the need to hold more stock and to create facilities—possibly purpose-built—to store it. It could also mean sourcing more locally in the U.K., although volumes may be too small.

In Spain, there are Opel, Peugeot and Citroën plants; when shared platforms are introduced, PSA may wish to bring things together: Peugeot has a plant near Madrid, Citroën in Vigo and Opel in Zaragoza.

Q: What is your personal strategic view of the PSA take-over?

I think it a good idea from a scale aspect; PSA was struggling regarding scale and couldn’t keep up with its rivals. Now they will move ahead to play with the “big boys. To qualify that means a capacity of between at least 5 to 10 million units per annum. With Opel, PSA will now be up there—albeit only just. So the future for the PSA takeover of GM E looks good if that achievement of increased scale is regarded as important. But not everyone may be convinced that it is; it depends what is done with it! For that answer we will have to wait and watch.