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Opel reveals its 2020 vision: Return to profit, new models for SA

2017-11-09 11:13

Frankfurt - Opel unveiled on Thursday 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 with the hope it could turn around the lightning logo autoamker 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 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.

What about SA?

In June, Opel revealed its plans for the future with a new distributor in South Africa and more models set to join its local range. 

Opel says 2017 will be the "most active year" in its history, with the introduction of its “7 in 17” model offensive. New models for SA include its Crossland X (2017) and Grandland (2018).

Hayatinizi daha da güzellestirmek için tasarlandi! Yeni #CrosslandX

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Fewer platforms, more savings

Synergies with PSA are expected to result in savings of €1.1-billion 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 substantially reduce development and production complexity, thus allowing 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.

The future is electric

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 automaker 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 in 2016.

Nobody to get the sack

The plan also had some good news for the employees of the storied German automaker who had been bracing for job cuts.

"The plan is designed with the clear intention to maintain all plants and refrain from forced redundancies in Europe," said Opel, although it did indicate that it was looking for savings from employees as well.

"The necessary and sustainable reduction of labour costs shall be reached with thoughtful measures such as innovative working time concepts, voluntary programmes or early retirement schemes," it added.

Opel-Vauxhall employs some 38 000 people around Europe, around half of them in Germany.

Industry expert Ferdinand Dudenhoeffer, director of Germany's CAR research centre, estimates that Opel-Vauxhall's reorganisation could see it shed some 6000 jobs to help it "catch up to PSA in terms of productivity".

Opel also announced it will enter more than 20 new export markets by 2022.

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.

The sweeping changes looming at Opel carry echoes of the tough-love approach PSA chief Carlos 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.

Read more on:    opel  |  france  |  south africa  |  germany  |  new models  |  cars  |  auto industry

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