Commentary

PSA Group Unveils Its Electrifying Plans To Revive Opel/Vauxhall

Now that Peugeot-owner PSA Group has its hands on the Opel and Vauxhall steering wheels, it intends to drive the brands to a destination that former-owner General Motors had a hard time locating on its GPS: profitability. It also says it will have four electric vehicles of the road by 2020 and that all of its car lines will offer electrified versions by 2024.

It’s all part of a strategic plan the automaker has dubbed “PACE!” that Opel’s new CEO, Michael Lohscheller, rolled out in a livestreamed press conference from it headquarters in Rüsselsheim, Germany, yesterday, while proclaiming “the status quo is not an option.”

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“The company promised ‘necessary and unavoidable’ job cuts but said it wanted to avoid compulsory redundancies and site closures as it looks to reduce spending by €1.1 billion by 2020 by combining manufacturing, research and procurement with its new French owner,” Peter Campbell writes for Financial Times

“Currently, Opel’s only EV is the Chevy Bolt EV, which is sold as the Ampera E,” writes Fred Lampert for Electrek. “Opel hasn’t been able to capitalize on the demand for the Ampera E in Europe because it is dependent on GM’s supply of the Chevy Bolt EV.

“GM limited the allocations in each market to extremely low volumes, which forced Opel to ask its Norwegian dealers to stop taking orders for the Bolt EV last month and to later increase the price by $5,500 for the electric vehicle in Europe,” Lampert continues, pointing out that the new plan includes leveraging PSA’s tech in develop the new EVs.

“Having full access to Group PSA technologies, Opel/Vauxhall will become a European CO2 leader. 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,” CEO Lohscheller said.

He also proclaimed: “PACE! will unleash our full potential. …Our future will be secured and we will contribute with German excellence to the Groupe PSA development. The implementation has already started with all teams eager to achieve the objectives.”

There’s reason to believe that there’s substance behind the unbridled optimism.

“The overhaul marks the next step in the turnaround for PSA Group, which also manufactures the Citroën brand. The French car maker was rescued from near bankruptcy in 2013 through a bailout from the French government and Chinese state-owned Dongfeng Motors,” the Wall Street’s Journal’s William Boston writes for Fox Business.

“Over the past three years, PSA has become one of Europe's most profitable companies as chief executive Carlos Tavares has tried to build Peugeot into a global competitor to Volkswagen AG, General Motors Co. and Toyota Motors Co.,” he continues.

“The plan aims to reduce Opel’s break-even sales figure to 800,000 cars in a year, slightly less than its worst year ever, 2013. By 2020, Lohscheller wants Opel to have a 2% operating margin, rising to 6% by 2026. By comparison, VW currently has a 4% margin, while Peugeot and Citroën share a margin of just over 7%,” points out Neil Briscoe for the Irish Times.

“Opel will become quite French in the process,” observes Sean Szymkowski for the GM Authority blog. “All Opels will move to a PSA platform and PSA will reduce the number of platforms for the brand’s cars from nine to just two. The automaker spelled out a similar strategy for powertrains with a reduction of 10 combinations to four in the future.”

Forbes contributor Neil Winton cites a couple of business professors who are skeptical of the ambitions for Opel/Vauxhall, as well as some analysts who take a more positive POV.

“Opel-Vauxhall has a huge production network in Europe, including Ruesselsheim, and Opel made a lot of soothing noises to calm German fears about the future. But it was all a bit disingenuous, really, saying they will refrain from forced redundancies because in a few years' time, when harsh decisions have to be made, they can say, ‘We meant it at the time.’ Opel-Vauxhall loss-making is not just going to go away. Something quite dramatic and credible will have to be done,” Nick Oliver, professor of management at the University of Edinburgh Business School, tells Winton.

On the other hand, “Bernstein Research analyst Max Warburton declared ‘PSA-Opel — Can they fix it? Yes they can,’ although he acknowledged that Opel’s finances were worse than expected. Warburton wanted PSA to close down the Vauxhall brand, which sells identical Opel products in Britain with its own name,” Winton writes.

If all this talk has made you nostalgic for that Peugeot, Vauxhall or Opel you drove on the Interstates umpteen years ago, take heart. As Ian Thibodeau reported for the Detroit News, PSA Group announced plans for re-entering the U.S. market after a quarter-century hiatus by launching a car-sharing service on the West Coast back in April.

 

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