GENEVA -- The sale, if you can call it that, of GM’s Opel and Vauxhall brands to PSA Group will have wide-ranging effects on General Motors as an engineering organization. And some will be positive.
GM and PSA agreed Monday on a deal which sees the French company pay GM $2.3 billion for Opel and Vauxhall, but GM has to pay $3.18 billion into Opel/Vauxhall’s pension plans. So to my eyes, this deal doesn’t look much like a sale.
That said, once Opel/Vauxhall is gone, GM will no longer have to worry about engineering a vast array of vehicles to meet both European and U.S. federal crash and emissions standards.
Before the deal came together, GM says only 20 percent of the vehicles in Opel’s future product lineup were to be shared with the rest of GM, so the European unit’s benefits to the rest of the company would have been diminished.
GM also told analysts Monday that another motivation for the sale came after the company determined it could not independently achieve significant economies of scale in emissions technology across Europe, where smaller engines and diesels dominate, in contrast to bigger, gasoline engines in North America.
GM can now redirect engineering resources to focus mostly on its core U.S. lineup. European crash standards feature requirements, such as pedestrian protection regulations, that are not similar to U.S. rules and inject considerable complexity into design and manufacturing. GM will still have to create vehicles for China, which closely follows European emissions standards, but those are already close to U.S. standards for gasoline engines.
So, without the need to engineer and build vehicles that use different parts and different software, GM appears to have at least partially solved a problem vexing the entire industry: a critical shortage of engineers.
Without having to worry about developing vehicles for Europe, GM should be able to reduce product development cycles and budgets, since fewer vehicles will tie up the company’s resources and management manpower.