9 nov 17

PSA’s PACE plan to turn Opel profitable by 2020

This morning, Opel CEO Michael Lohscheller disclosed the strategic plan for Opel and Vauxhall. Named Pace, this plan is to make the former GM subsidiary profitable by 2020, reducing the financial break-even point to 800,000 units per year.

Fortunately for Opel employees, this does not involve closing any of the existing factories. Instead, these factories will gain investment to modernise and increase efficiency. The necessary reduction of labour costs shall be reached by innovative working time concepts, voluntary programs or early retirement schemes.

Wanted: €700 savings per car

The first step in Opel’s reorganisation is driving down the costs by €700 per car by 2020. This will mainly be achieved by reducing complexity across all functions and the wage cost/revenue ratio. Other savings are to be found in increased marketing efficiency, optimised R&D and enhanced administration processes.

Industrially speaking, Opel needs to cut down from nine platforms today to just two modular (PSA) ones by 2024. The next years will see the accelerated introduction of PSA powertrains. To improve competitiveness of the plants, PSA will reallocate vehicles, meaning that Rüsselsheim and Eisenach will be building not only Opel-branded cars, but also other PSA models from 2019 onwards.

From Rüsselsheim, with love

Opel can take pride in the fact that PSA has chosen Rüsselsheim as one of its global competence centres – not only for Opel itself, but for the entire group. Affordable advanced technology made in Germany is indeed to remain a core value of Opel.

Furthermore, Opel is to enter 20 new markets by 2022. Especially its LCV business holds great potential, according to PSA. In 2018, the brand will be launching the next-generation Combo. To ensure long-term sustainability, PSA will explore further global midterm overseas export opportunities.

Evolutionary electrification

Rumour had it that Opel was to become an entirely electric brand. That is not how Tavares sees things. The Pace plan seems only moderately ambitious in this respect: the press release states that “by 2024, all European passenger car lines will be electrified – offering a pure electric propulsion or plug-in hybrid version alongside internal combustion engines.”

Incidentally, the Ampera-e, which is built by Opel's former parent company GM in Detroit, will probably never reach Europe in large quantities because GM – logically – prioritises its own (and very successful) Chevy Bolt – on which the Ampera-e is based.

The next electric car in the pipeline will be based on the future Corsa, which launches in 2019. There are no plans for other EVs in the short term. Like other carmakers, PSA will mainly focus on plug-in hybrids and mild hybrids (48V). In the case of Opel, the recently launched Peugeot 3008-based Grandland X is to become the brand’s first PHEV.

Authored by: Dieter Quartier