The Baffling PSA-General Motors Deal Looks Like Commercial Suicide

PSA buying Opel and Vauxhall could be the daftest thing I’ve ever heard. What would a manufacturer of ordinary, competent mainstream cars do with another ordinary, competent mainstream car brand?

You could argue that Citroen, one of PSA’s three car brands, is a bit different. Check out the slightly weird but endearing C4 Cactus and the new C3. Clearly we can expect Citroen to keep making cars that look totally different to anything else, which is a good thing. Its cars seem to be getting old-school soft springs, too, which, again, is something to separate it from the rest of the seething masses.

But it’s still priced smack-bang in the middle of the mainstream. So is Peugeot, another PSA brand, even though it’s creeping upmarket. The final one, DS, is branded as a premium product but the goods don’t back up the prices. DSs are more like mainstream products sold with badge tax they haven’t earned yet. In fairness, once the first wholly post-Citroen designs and interiors start filtering through to production, that might change.

What PSA has now are three brands that don’t quite know what they are. DS wants to be all premium-sporty-stylish but isn’t because it’s built to mainstream standards by a mainstream car maker, Peugeot wants to be Audi but isn’t, for the same reason, and Citroen wants to be a 1950s version of itself for the 21st Century, with products that look unique but, of course, can’t really be because they still share half their parts with highly normal Peugeots.

Adding the Opel and Vauxhall brands to the mix does what, exactly? The Insignia and 508 aren’t exactly worlds apart. There’s not really much to separate the Corsa, 208 and C3 apart from looks. There’s about 99 per cent overlap between the Astra, C4 and 308, too, except for the fact that the 308 is easily the best of the three for reasons that are far too sensible consumer advice for me to meander into here.

But worse than the product overlap is the degree of losses Opel and Vauxhall are making in Europe. General Motors tried to sell its European brands after it went bankrupt in 2009, but couldn’t. In 2016 the division posted a £206 million loss. That’s… bad. Given that PSA needs its Chinese partner Dongfeng to throw cash into the deal to even make it possible, can it really sustain those losses? No, it can’t. Factories would have to close and production would have to be streamlined. Fast. That sort of chaos and negative PR isn’t the best when you’re trying to shape what would be five different brands in four different ways.

Let’s compare the PSA portfolio, assuming it does shell out for Opel and Vauxhall, with the conglomerate PSA would clearly be trying to rival: the Volkswagen Group. In general the Germans obviously know how to run a car business, having taken on lost causes like Skoda, Bentley, Rolls-Royce and Lamborghini, making money out of them all.

In the mainstream, VW owns Audi, Skoda and Seat, which have, for the most part, been big winners for the parent company’s bank balance. There’s obviously some overlap between Skoda, Seat and VW, with style the main difference, but spec and technology is carefully managed, to place VW slightly above the other two. Those who want to see the differences, do.

So perhaps what PSA has in mind is to leave Opel and Vauxhall as straight-laced, average Joe brands in Europe and the UK respectively, while moving its own wares out to more interesting pastures. Maybe Peugeot could one day compete with Audi and BMW. Maybe Citroen will become the most recognisable brand in the world. Maybe in time DS will be the hottest, most desirable brand this side of Pagani.

But to make the Peugeot, Citroen, DS, Opel and Vauxhall brands work together; to differentiate them and make each one convincing enough in its own right could, and probably would, take decades. Is it worth PSA over-stretching itself now, when Europe isn’t exactly stable, just to maybe, possibly see some benefit in 30 years? It seems more like commercial suicide.