PSA Seeking ‘Refund’ From GM For Opel Emissions Discrepancies

by under News on 06 Dec 2017 12:11:59 PM06 Dec 2017

Do they go back with a receipt? 

PSA Seeking ‘Refund’ From GM For Opel Emissions Discrepancies

French automotive conglomerate PSA Group may be the proud new parent of marques Opel & Vauxhall, but it’s far from beaming. It appears that while the dust was settling over its  €1.3-billion ($2.02-billion in our money) acquisition of the two companies from American firm GM, it discovered huge discrepancies between GM’s claimed emissions roadmap versus the reality of the situation. The exposure to massive fines come 2021 when the latest set of emissions regulations kick in has led to PSA to seriously consider taking legal action in pursuit of compensation.

The PSA acquisition of Opel (and sub-brand Vauxhall) was completed in July, and the PSA Group didn't take long before it detailed how it intends to move the greater Opel lineup to PSA platforms, and make full use of the drivetrain technology that was already being developed by the French firm. While this was expected to take effect in 2027, it appears that Opel’s pending violation of 2020-2021 European Union emissions regulations will require PSA move that timeline up by no less than 3-years. That’s a huge move no matter how you cut it.

As a result of this massive inconvenience, PSA will be seeking between €600-800 million ($933-million to $1.24-billion). 

PSA Seeking ‘Refund’ From GM For Opel Emissions Discrepancies

*All smiles during the acquisition announcement

Sources speaking to Reuters said that both companies have engaged in discussions with regards to the emissions discrepancies, though the French firm has yet to initiate formal legal action. PSA believes that it was misled by GM insofar as Opel’s CO2 trajectory was concerned, and that the American firm wasn’t being entirely forthcoming both before the agreement on acquisition in March, and the completion of the move in late July.

“We became aware a few weeks after we finalised the closing hat the company was going to the wall on CO2 emissions. We put our teams to work to completely rebuild the product and technology strategies. If you fail to comply with EU rules, the weight of the fines you are hit with can threaten the company’s existence.” — Carlos Tavares, CEO, PSA Groupe
PSA Seeking ‘Refund’ From GM For Opel Emissions Discrepancies

One source that spoke up abut the issue said that PSA was taken aback by Opel’s existing CO2 compliance plan, that hinged significantly on successful sales of the Opel Ampera-e electric vehicle, despite that model racking up a substantial €10,000 loss (that’s about $15,600) with every model sold. That plan would have resulted in “enormous losses” by the company, and PSA has since stopped sales of the Ampera-e in Norway, while general European purchase prices have been upped by as much as €5700 (or about $9000).

“Their technical solution was economically unviable, and would have led to enormous losses. So the first thing you do is drop that product line, but then the fleet emissions explode.” — Source from PSA Groupe, speaking to Reuters
PSA Seeking ‘Refund’ From GM For Opel Emissions Discrepancies

GM insists that it was entirely upfront about Opel’s emissions issues, with GM’s head of automotive Thomas Goettle saying that the company has “reported for years” that there would be “significant problems meeting the CO2 targets as GM brands in Europe.” And while the company did say that Opel/Vauxhall would be off target by some 3.7-grammes/kilometre of CO2 come 2021, the removal of the Ampera-e from the lineup would see that overshoot almost double to 6-grammes, though this was apparently made clear during the negotiation phase.

However, PSA sources claim that the situation was far more dire, with a 10-gramme overshoot more likely by the time new regulations kick in. It was said that GM did tell PSA of a “slight overshoot” of the CO2 targets, but a discrepancy as much as 10-grammes would result in EU emissions fines nearing €1-billion (or about $1.56-billion). As a result, the entire Opel lineup will have to be redeveloped to use PSA’s platforms & powertrains some three years ahead of schedule, with the complete transition expected by 2024 (rather than 2027). 

PSA Seeking ‘Refund’ From GM For Opel Emissions Discrepancies

You can understand why PSA’s upset by the whole affair, as best described by one source from PSA who spoke up on the matter. “One question that was asked,” he said, “was whether Opel could meet its 2021 emissions target. And the answer was ‘yes.’”

Stay tuned to CarShowroom as we bring you more updates as they come.

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