Opel CEO on reaching breakeven in 2016: 'We can see the target now'

This is the year Opel expects to break even financially after more than a decade of losses, finally rewarding parent General Motors' huge investment in its European division. Karl-Thomas Neumann, who next month will celebrate the start of his fourth year as Opel CEO, says the automaker has beaten all internal targets since he arrived. He is confident that 2016 will be successful. Neumann said, however, that the final miles of any race are the always the hardest. He spoke with Automotive News Europe Editor Luca Ciferri, Managing Editor Douglas A. Bolduc and Correspondent Christiaan Hetzner at last month's Detroit auto show.

How are you progressing on your target to reach breakeven this year?

Since I arrived here we've met our [internal] budget and overachieved on our targets for 11 straight quarters. I always compared it with a marathon, the further you go, the harder it gets. We can see the target now. We have built the brand. We have fantastic product. We will fight for these last miles and get across the finish line.

Over the first nine months of 2015 you improved net pricing by 700 million euros. How?

We are selling more options and trim lines, such as with the new Astra. Secondly we are doing less tactical spending [offering discounts and incentives]. We would have had much more growth had we had spent more [on incentives] on the cars.

How much is GM contributing to fund Opel's 2022 business plan? The previous one called for 4 billion euros through the end of this year.

We have not updated it since [April 2013]. But it's huge. GM invests a lot into our growth, into new product, and we want to really bring Opel into a stable, sustainable position in Europe.

Isn't the volume car market in Europe structurally a very low margin business even in good years?

We have reduced costs a lot and we will do a little more, but that's not how to get there. We can only get there with growth. So we are investing into adding 29 new cars by 2020, and these cars must help us to get to an 8 percent market share in 2022. We would then be in a much better situation because our factories will be far better utilized. All our new cars now sit on either GM or PSA global architectures with standardized modular components. That scale will bring us to a cost situation where we can achieve the 5 percent EBIT margin in 2022.

What can you tell us about your next two major launches, the Meriva and Zafira minivans? Both will be underpinned by platforms from PSA/Peugeot-Citroen.

We need something which is a little bit more hip than the current Zafira Tourer, so both models will be positioned as more of a lifestyle crossover when they come later this decade.

Will the PSA cooperation survive the first product cycle?

Absolutely. Our intention is to learn how to be successful together and then we can talk about the future. My first priority, however, is always to find synergies within GM, but if we don’t have them, then finding them with PSA is a better option than not developing a model. In the beginning we wanted to do some of our main cars together with PSA, but that has changed. We only will do cars with PSA if we don’t have an architecture in the GM group, such as with these crossovers because they are a European thing.

Are you currently talking to PSA about the next stage of the alliance?

There’s always a number of subjects we discuss which could be done together, so we see potential. But the focus is on delivering now, that will be proof that this partnership works.

How do you think autonomous driving will shape mobility?

We see the potential much more in the commercial area, such as car sharing, for example, where the growth limitations for companies such as Uber or Lyft is finding enough drivers. The value of a driverless car for such a company is extremely high, and that’s why GM invested $500 million in Lyft.

Will Opel offer a fully autonomous vehicle by 2020?

I am still hesitant to give you a timeframe. Furthermore, I don't think Opel is the brand to spearhead this. Our job is to make sure existing technologies move as as quickly as possible and as affordably as possible into our cars.

What uptake rate do you see for your digital concierge service OnStar?

Roughly every second Opel sold today comes with OnStar. Some people also pick it as an option. I expect by the end of 2016 we will have about half a million OnStar customers and by the end of next year we should have 1.2 million.