Car

PSA Group Wants a Refund, Saying General Motors Misled It on Opel/Vauxhall Emissions

Ever pay cash for a used car, only to have it fail inspection because the seller neglected to inform you of missing or nonworking emissions equipment? Makes you want to demand your money back. That’s how the PSA Group is feeling about Opel and Vauxhall, which it purchased from General Motors in August.

According to a report from the Reuters news service, the French company overseeing Peugeot and Citroën claims the Detroit automaker didn’t say how badly its Opel and Vauxhall cars would fall short of European CO2 standards until weeks after the sale closed. As a result, PSA wants GM to cough up at least $700 million. That’s half of the roughly $1.4 billion that PSA paid for the two brands as part of the larger deal earlier this year.

Unnamed sources speaking to Reuters said that while PSA hasn’t filed a formal claim against GM, it can request arbitration under the sale agreement if negotiations don’t pan out. Unsurprisingly, neither side is commenting on the matter.

The issue, as PSA CEO Carlos Tavares said earlier this month while unveiling his business plan for the two former GM brands, is that his team “became aware a few weeks after we finalized the closing that the company was going to the wall on CO2 emissions.” Specifically, EU regulations mandate that automakers meet a fleet average of 95 grams per kilometer (roughly 57 mpg) by 2021, down from the current 130 grams (42 mpg). The EU will fine automakers 95 euros, currently about $110, for each gram over the limit, which is multiplied by every car sold. Initially, PSA believed Opel and Vauxhall would exceed the 2021 limit by 3.7 grams. But now, the current product portfolio is expected to fail by 10 grams, which could cost PSA hundreds of millions in fines. The Reuters report cited GM’s “unrealistically high” sales projections for diesel-powered cars and for the electric Ampera-e, the European version of the Chevrolet Bolt EV.

Under regulatory and financial pressure, PSA has committed Opel and Vauxhall to sell four electric and plug-in hybrid models by 2024 and to bring those powertrains to every Opel and Vauxhall by 2024. At that time, those cars will move to PSA platforms, a time frame that is three years ahead of what PSA had initially planned. Under GM, both brands lost money for 16 consecutive years. Caveat emptor, especially where automotive purchases are concerned.

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