General Motors (GM) may have "thrown out the baby with the bathwater" in the sale of its European Opel and Vauxhall brands to French rival Peugeot, the head of rival firm Fiat Chrysler (FCA) has told CNBC.
FCA CEO Sergio Marchionne said that while he appreciated the rationale for shedding the long-time loss-making division, he criticized the basis on which the deal had been executed.
"There's no doubt that I think Mary (Barra, GM CEO) and her team are focusing on improving the profitability of the house and this is seen as a quick fix to a problem which has been sitting inside GM for a long time," he said Tuesday on the sidelines of the Geneva Motor Show.
He noted that the marginal improvement in return on invested capital did not provide a sufficient justification for the terms of Monday's sale.
"I understand that they (GM) want to get out just to get rid of the problem, but you may have thrown out the baby with the bathwater," he added.
Turning to look at the transaction from the perspective of the buyer, PSA Group, owner of the Citroen and Peugeot brands, Marchionne implied that the jury remained out for now.
"If it's true that the benefits that PSA is going to get out of this deal are of the caliber that he's talking about then the profitability of that business at PSA will actually be acceptable. It's not extraordinary but it's not bad," he surmised.