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General Motors in Talks to Sell Opel Business to PSA Group
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General Motors Company (GM - Free Report) is in talks with France's PSA Group to sell its underperforming European business - Opel. Notably, PSA Group mainly manufactures Peugeot and Citroen cars. PSA Group and General Motors have collaboratively worked on several projects in Europe. Meanwhile, PSA Group has been undertaking several initiatives to improve profitability and operational efficiency.
The General Motors Opel division includes the British Vauxhall brand. However, the automaker has been finding it difficult to boost profits at the Opel unit. In 2009, the company had planned to vend the division to Canada's Magna.
General Motors has been incurring losses in Europe for quite some time. It recorded full-year profits in 1999 on a pre-tax basis. The sale of the Opel business will bring down the losses for the company to a certain extent. Meanwhile, Opel provides design work and General Motors uses Opel models as the base for GM models in other markets.
After the acquisition, PSA Group will have a 16.6% market share in Europe. Thus, it will be the second auto giant in the continent after Volkswagen Aktiengesellschaft’s 23.9% share.
Expansion of operation size will provide per capita cost advantage as the fixed costs will be distributed. Further, in order to reduce costs, PSA Group may eliminate overlapping models. However, the union leader will demand security of German factories and workers.
General Motors underperformed the Zacks categorized Automotive-Domestic industry over the last three months. Share price of the company increased 11.9% over the period while the industry saw a 16.6% increase. The company has been facing the brunt of decreased vehicles sales in the U.S. in 2016 and a large number of recalls.
Zacks Rank & Other Key Picks
General Motors currently carries a Zacks Rank #2 (Buy).
Honda has an expected earnings growth rate of around 27% for the current year. Meanwhile, Fox Factory has an expected earnings growth rate of around 16.6% for the current year.
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General Motors in Talks to Sell Opel Business to PSA Group
General Motors Company (GM - Free Report) is in talks with France's PSA Group to sell its underperforming European business - Opel. Notably, PSA Group mainly manufactures Peugeot and Citroen cars. PSA Group and General Motors have collaboratively worked on several projects in Europe. Meanwhile, PSA Group has been undertaking several initiatives to improve profitability and operational efficiency.
The General Motors Opel division includes the British Vauxhall brand. However, the automaker has been finding it difficult to boost profits at the Opel unit. In 2009, the company had planned to vend the division to Canada's Magna.
General Motors has been incurring losses in Europe for quite some time. It recorded full-year profits in 1999 on a pre-tax basis. The sale of the Opel business will bring down the losses for the company to a certain extent. Meanwhile, Opel provides design work and General Motors uses Opel models as the base for GM models in other markets.
After the acquisition, PSA Group will have a 16.6% market share in Europe. Thus, it will be the second auto giant in the continent after Volkswagen Aktiengesellschaft’s 23.9% share.
Expansion of operation size will provide per capita cost advantage as the fixed costs will be distributed. Further, in order to reduce costs, PSA Group may eliminate overlapping models. However, the union leader will demand security of German factories and workers.
General Motors Company Price
General Motors Company Price | General Motors Company Quote
Price Performance
General Motors underperformed the Zacks categorized Automotive-Domestic industry over the last three months. Share price of the company increased 11.9% over the period while the industry saw a 16.6% increase. The company has been facing the brunt of decreased vehicles sales in the U.S. in 2016 and a large number of recalls.
Zacks Rank & Other Key Picks
General Motors currently carries a Zacks Rank #2 (Buy).
Other favorably ranked companies in the auto space include Honda Motor Co., Ltd. (HMC - Free Report) and Fox Factory Holding Corp (FOXF - Free Report) . Both the stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Honda has an expected earnings growth rate of around 27% for the current year. Meanwhile, Fox Factory has an expected earnings growth rate of around 16.6% for the current year.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>