Opel’s 2020 vision: Profit, finally

FRANKFURT AM MAIN (AFP) – Opel unveiled yesterday a plan to jump start its financial performance with a return to profit in 2020 thanks to savings its new owner French auto giant PSA is to help it achieve without plant closures or forced job cuts.

PSA, which also owns Peugeot and Citroen, took over Opel and its British sister brand Vauxhall from US giant General Motors in August for 1.3 billion euros with the hope it could turn around the lightning logo carmaker which has not turned in a profit since 1999.

Given 100 days by the new owners to draw a map to drive Opel-Vauxhall out of the red, Opel chief executive Michael Lohscheller laid out measures that aim to boost competitiveness and cut costs by 700 euros per car in three years.

“This plan is paramount for the company, to protect our employees against headwinds and turn Opel-Vauxhall into a sustainable, profitable, electrified, and global company,” Lohscheller said in a statement outlining the plan.

Called PACE!, the plan appears to rely heavily on savings from adopting PSA technology and merging some functions to achieve economies of scale.

The logo of Opel seen on a car. – AFP

Synergies with PSA are expected to result in savings of 1.1 billion euros by 2020 and 1.7 billion by 2026.

Two PSA car platforms, destined as the basis for several models, will be quickly introduced at Opel-Vauxhall manufacturing sites, speeding the shift to PSA engines and transmissions.

Overall, Opel aims to reduce the number of platforms it uses for passenger cars from nine currently to two by 2024, with the number of powertrains cut by ten to four.

“Aligning architecture and powertrain families will substa-ntially reduce development and production complexity, thus allo-wing scale effects and synergies, contributing to overall profitability,” said Lohscheller.

Adopting PSA equipment should also help Opel comply with new EU-wide carbon emissions regulations, an area where it has been seen as lagging.

“Having full access to Groupe PSA technologies, Opel/Vauxhall will become a European CO2 leader,” the company said in its statement. The PACE! plan also calls for a quick push to market with electric cars.

Opel’s famed Ruesselsheim site will become an engineering hub with a focus on electric vehicles and automated driving technology for the entire PSA Group, as European automakers scramble to catch up with tech giant Tesla in the race to produce the cleaner cars of the future.

“By 2024, all European passenger carlines will be electrified – offering a pure battery electric propulsion or plug-in hybrid version alongside efficient internal combustion engines,” Opel said in its statement.

It promised four car models would have electric options by 2020, including a fully electric SUV and its sub-compact Corsa.

The carmaker is hoping that the measures will help it reduce its profitablity point to 800,000 vehicles, thus “creating a profitable business model whatever the headwinds may be”. Opel-Vauxhall sold around 1.16 million vehicles last year.