Peugeot in audacious Vauxhall bid

The owner of Peugeot is poised to buy Vauxhall and Opel from General Motors (GM) in a transformative deal for the European car market.

PSA Group has revealed it is in talks over a “potential acquisition” of GM’s European car business as it explores “strategic initiatives” aimed at boosting profits and cutting costs.

However, it said there could be “no assurance that an agreement will be reached”.

GM employs around 35,000 people in the UK under the Vauxhall brand, including 4,500 at plants in Ellesmere Port and Luton.

PSA has been working with GM on three projects across Europe since 2012, which delivered “substantial synergies” for both groups.

“Within this framework, General Motors and PSA Group regularly examine additional expansion and cooperation possibilities, as well,” a PSA spokesperson said.

“PSA Group confirms that, together with General Motors, it is exploring numerous strategic initiatives aiming at improving its profitability and operational efficiency, including a potential acquisition of Opel,” they said.

“There can be no assurance that an agreement will be reached.”

PSA Group, which also owns Citroen and DS, saw its Paris-listed shares jump as details of the potential deal were revealed.

GM said last year that it had to raise UK car prices by 2.5% after the EU referendum result caused the British car industry to hit a “speed bump”.

The US motor giant behind Chevrolet and Cadillac added that its European arm was on course to break even before the plunge in the value of the pound following the Brexit vote.

Announcing its full-year results last week, GM said losses had narrowed to £206 million in its European arm in the year to the end of December.

The performance represented an improvement on the £651m loss of the year before.

It also drove down fourth-quarter losses to £197m, from£238m in the three months to December 31, 2015.

The Vauxhall Astra production line at Ellesmere Port.