General Motors sells Opel, Vauxhall as it pulls back from Europe

DETROIT – General Motors is saying goodbye to its Opel and Vauxhall brands and ending its presence as a major automotive manufacturer in Europe after nearly 90 years there.

GM said Monday it has reached a deal to sell its European operations to French automaker PSA Groupe for $2.2 billion, a decision that shakes up the automotive landscape in Europe and could lead to additional consolidation in the global automotive industry.

The deal instantly vaults PSA into second place in Europe with 17 percent market share, second only to Volkswagen AG. PSA Groupe has ambitions to become an even larger player by capitalizing on the national identities of four automotive brands — Peugeot, Citroen, Opel and Vauxhall.

"We want to create a European automotive champion," PSA Groupe Chairman Carlos Tavares said. "We will totally unleash the potential of the Opel and Vauxhall brands."

Selling Opel and Vauxhall frees GM from a division that has bled money for 16 consecutive years, allowing the Detroit automaker to spend more time and money on the development off self-driving cars and on developing cars and trucks in North America and China, where it is earning most of its profits.

"This was a difficult decision for General Motors," GM CEO Mary Barra said. "But we are unified in our belief that it is the right one."

Barra said GM's European unit would have met its goal of not losing any money in 2016 had it not been for additional currency costs caused by Britain's exit from the European Union. Barra said GM executives came to realize that the so-called Brexit, combined with Europe's tough regulatory environment, would continue to make it difficult for GM to earn profits in Europe.

PSA Groupe said it is forming a 50-50 joint venture with French bank BNP Paribas to purchase and operate GM's car financing division.

GM will retain its engineering center in Torino, Italy, and will have the right to buy stock in PSA Groupe valued at $689 billion over the next nine years. Based on a reference price of 17.34 euros, the stock rights correspond to about 39.7 million shares of PSA Groupe, or 4.2 percent of the French automaker's total shares.

GM also said it will record a noncash special charge of $4-4.5 billion after the transaction closes later this year.