TURIN -- Carlos Tavares, PSA Group's energetic CEO, made a promise when he took over the struggling French automaker in 2014: Let us fix the business, then we can look to forge partnerships that foster our growth.
He's done the first part. PSA will report its full-year results this week, but in the first half of 2016, the company showed a 6.8 percent operating margin in its core auto division and 6 billion euros ($6.35 billion) of net cash.
Now Tavares is living up to the rest of his promise as PSA discusses the takeover of General Motors' Opel and Vauxhall units. Still, analysts struggle to find logic in the deal for Tavares, particularly since the PSA boss -- like GM's CEO Mary Barra -- has always been an advocate of profits over volume.
"While we reserve judgment until any deal is done, we understand GM's rationale to sell more than PSA's interest to buy," said Dominic O'Brien of Exane BNP Paribas in London.
O'Brien says a full takeover could yield a modest 1 billion euros ($1.06 billion) in additional savings. The two companies expect $1.2 billion by 2018 from the joint development of four vehicles and a purchasing joint venture.