Opel-Vauxhall To Focus On Electrification, Expand Globally
“Opel will enter more than 20 new export markets by 2022 (and) explore global midterm overseas profitable export opportunities”
Opel-Vauxhall, sold to France’s PSA Group by General Motors, plans to concentrate on electrification and expand its sales outside of Europe for the first time.
Opel-Vauxhall, outlining its long-term plan after being taken over by PSA, said it will return to profit by 2020 with a 2% margin and announced efficiency savings, but held back from announcing big job losses or plant closures. The operating margin target is 6% for 2026.
Michael Lohscheller, CEO of Opel Automobile GmbH, said there would no forced redundancies, but left open the possibility of voluntary ones.
“The plan is designed with the clear intention to maintain all plants and refrain from forced redundancies in Europe. The necessary and sustainable reduction of labor costs shall be reached with thoughtful measures such as innovative working time concepts, voluntary programs or early retirement schemes,” Lohscheller said.
Media reports had suggested Opel-Vauxhall would bring forward the return to profit target to 2019. It will concentrate on electrification with 4 models in this category by 2020, and all models by 2024. The R&D center in Ruesellsheim will become a “global competence” centre for PSA Group.
Lohscheller said Opel will seek sales outside of Europe for the first time. When it and Vauxhall was owned by GM, this wasn’t allowed because it might clash with export sales from the U.S. Of the markets it said it will tackle for the first time, the U.S. was not included
Job losses and plant closures had been expected because Opel-Vauxhall lags far behind parent PSA in efficiency.
According to the Center for Automotive Research (CAR) at Duisberg-Essen University, Germany, Peugeot sells 35 new cars per employee, compared with 30.4 for Opel-Vauxhall. Opel-Vauxhall would need 6,000 fewer employees if its plants were as productive as Peugeot’s French ones.
In the first half of 2017, PSA generated a profit of 913 euros ($1,060) per vehicle, while Opel-Vauxhall lost 686 euros ($800) per vehicle in the first quarter of 2017.
Opel-Vauxhall will lower the break-even point to 800,000 cars a year, but it wouldn’t say, during a question and answer session after the presentation, what that figure was now.
It will also seek leadership in the race to cut CO2 emissions. Currently, Opel Vauxhall is at the back of the field.
With the help of synergies from PSA, it will save 1.1 billion euros ($1.3 billion) by 2020 and 1.7 billion ($2.0 billion) by 2026.
The number of platforms Opel/Vauxhall uses for its cars will be reduced from currently 9 to 2 by 2024.
“Opel will enter more than 20 new export markets by 2022. Beyond that, Opel will explore global midterm overseas profitable export opportunities,” Lohscheller said.
PSA is Europe’s second biggest selling car maker behind Volkswagen with its Peugeot, Citroen and DS brands.
The Opel-Vauxhall restructuring plan was expected to follow a similar model used by PSA CEO Carlos Tavares when he rescued the company from the brink of bankruptcy. Tavares cut back on the over-production of vehicles to stop heavy discounting and self-registrations, and restore profit margins. This over-production policy led to Opel-Vauxhall racking up almost unbelievable losses, reaching a total of almost $20 billion since 2000.
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