PSA reveals its Vauxhall revival plan
But return to profit will come at a cost, PSA boss Tavares warns
The PSA Group’s bid to make Vauxhall and Opel profitable again by 2020 without resorting to factory closures will only work if workers, unions and suppliers agree to be flexible and follow the rescue plan conceived for the firm, according to boss Carlos Tavares.
At present, Vauxhall and Opel are estimated to lose about £3 million a day. In the second quarter of 2017, the firm reported a £190 million operating loss. Under the plan, Opel’s new management has targeted making a 2% operating profit by 2020 and a 6% operating profit by 2026. When Tavares took over PSA in 2013, it had an operating deficit of 2.8%. Today, it registers a 7.3% operating profit, more than the Volkswagen Group. However, Tavares warned that the turnaround would come at a cost: “With PSA, we were not always popular in all the decisions we had to make. But it is my belief that the unpopular leaders of today will be the heroes of tomorrow. The goal is that we can hand over a successful company to the next generation of leaders.”
As well as setting profit targets, Opel has outlined plans to keep all factories open if workers can agree flexible solutions, including voluntary redundancies and variable working hours. It intends to cut costs in centralised services such as marketing and IT, and by using only the two PSA Group vehicle platforms on all future cars, plus moving all cars to PSA powertrains. In total, it is looking to save about £615 on the cost of every car it makes.
In addition, the firm has pledged to offer electrified versions of all Vauxhall and Opel cars by 2024, including a pure-electric Corsa and a plug-in hybrid version of the Grandland X, and become profitable at the point it sells 800,000 cars a year. In its worst year in recent history, 2013, the company sold 813,000 cars.
Despite the changes, Tavares pledged that Opels and Vauxhalls would remain differentiated from Peugeot, Citroën and DS products, standing out for Germanic design and engineering.
“Just by giving the engineers and designers breathing space, I know they will express the German dimension of Opel,” said Tavares. “In honesty, we are moving from the centre of decision-making being Detroit [under former owner General Motors] to it being Opel’s base in Rüsselsheim.”
The unpopular leaders of today will be the heroes of tomorrow