Opel charts path back to the black under new owner PSA

Frankfurt am Main: French auto giant PSA’s newly acquired Opel unit is set to unveil a radical plan on Thursday to shake up operations and reverse years of losses, with employees of the storied German carmaker bracing for job cuts.
PSA became Europe’s second biggest automaker after Volkswagen in August after buying Opel and its British sister brand Vauxhall from US giant General Motors for 1.3 billion euros ($1.5 billion).
PSA, which owns Peugeot and Citroen, then gave Opel chief executive Michael Lohscheller 100 days to come up with a strategy to return Opel-Vauxhall to profitability.
Lohscheller and PSA boss Carlos Tavares will jointly present the so-called “plan for the future” at Opel’s historic Ruesselsheim headquarters outside Frankfurt, with workers’ ears pricked for clues about their fate.
Loss-making since 1999, Opel-Vauxhall aims to at least break even by 2019 and record a profit by 2020, German newspaper the Frankfurter Allgemeine Zeitung (FAZ) reported this week, citing details from the turnaround plan.
Opel-Vauxhall employs some 38,000 people around Europe, around half of them in Germany.
Workers have been told their jobs are safe until 2018 to honour existing agreements, but PSA has made no promises beyond that date.
Industry expert Ferdinand Dudenhoeffer, director of Germany’s CAR research centre, estimates that Opel-Vauxhall’s reorganisation could see it shed some 6,000 jobs to help it “catch up to PSA in terms of productivity”.
The FAZ, which did not cite its sources, said the restructuring plan shows that PSA wants to drag Opel back into the black by cutting labour costs and limiting overlaps within the PSA group, while pushing a stronger focus on new and greener technologies.
The daily said the carmaker plans to reduce the number of models Opel-Vauxhall produces, end its practice of offering heavy discounts and wade into markets untapped by previous owner GM.
In its 88-year ownership of Opel, US giant GM never allowed the loss-plagued firm to expand outside Europe — notably barring it from entering the lucrative Chinese market. — AFP
In another major change, all Opel cars will be built using mainly PSA technology to achieve economies of scale, according to the FAZ.
The move would also help Opel comply with new EU-wide carbon emissions regulations, an area where the carmaker with the lightning logo is seen as lagging, according to the FAZ.
“The drivetrains of Peugeot and Citroen are clearly seen as much more efficient,” it said.
Opel’s famed Ruesselsheim site will become an engineering hub with a focus on hybrid and fully electric vehicles, as European automakers scramble to catch up to tech giant Tesla in the race to produce the cleaner, electric cars of the future.
PSA has said that it plans to electrify 80 per cent of its fleet by 2023.
The sweeping changes looming at Opel carry echoes of the tough-love approach Tavares employed when he took the helm at PSA in 2014, bringing it back from the brink of bankruptcy by slashing staff, freezing salaries and cutting per-unit costs.
The FAZ said it did not expect any immediate mass layoffs to be announced, predicting that Opel would start with a hiring freeze and offers of early retirement and severance packages.
Earlier this month, PSA already announced it would be cutting 400 jobs through voluntary redundancies at Vauxhall’s Ellesmere Port plant in England by the end of the year due to flagging sales.
Vauxhall directly employs about 5,000 people in Britain, most of them in two factories in England.
Despite assurances sought by the British government in recent months, the PSA group has said it could not commit to further investments in its plants there until there is more clarity on the Brexit talks between Britain and the European Union. AFP