When Opel CEO Karl-Thomas Neumann joined in March 2013, the year European new-car sales hit bottom, the GM subsidiary had just postponed yet another breakeven target after losses soared to $1.9 billion in the previous year. With Neumann in charge, GM agreed to fund 4 billion euros worth of investments through 2016. It even held its first board of directors meeting in Opel's German headquarters to demonstrate the parent's steadfast commitment.
In return Neumann pledged that by 2022 Opel would deliver an 8 percent European market share and an operating margin of 5 percent. The first test of that goal was attaining profitability last year. While Opel failed, it was a lot closer to making money than it had been in nearly two decades. Since Neumann joined four years ago, Opel managed to halt a market share slide it had suffered since European car sales peaked in 2007.
Key new models such as the Astra were winning important prizes, sales were slowly growing, and Opel’s once-disastrous image in Germany was on the mend, helped by ads that took advantage of Opel's underdog status.
Turning around a chronic money-loser such as Opel is no small feat. Whether it is Fritz Henderson, Carl-Peter Forster, Nick Reilly, Karl-Friedrich Stracke, Steve Girsky or Neumann – the list of executives that had their shot at making GM's European operations profitable is long. And all ultimately failed.
Said Tavares: "I have a high respect for the work that Neumann and his team did at Opel, but you cannot continue to lose money for more than a decade and burn 1 billion euros in cash each year." He added that he doesn't think you can plan the future if you do not manage to deliver results in the short term.
As talks continue about Opel's future without GM the company has started the biggest model offensive in its history, with seven launches this year that are expected to help it become Europe's second-largest automaker by sales next year, according to an IHS forecast. The new models include the revamped Insignia sedan as well as the Ampera-e, a purpose-built full-electric car with a certified range of more than 500 km.
Largely based on the Chevrolet Bolt, the Ampera-e beats Volkswagen brand's ID electric car to market by three years. Neumann is reportedly mapping out the transformation of Opel into an electric car brand. Perhaps that is why the otherwise Twitter-friendly CEO initially could only muster a tepid endorsement for the deal on social media: "In principle, an affiliation with PSA makes sense," he tweeted, even though he never once supported deeper ties with the French carmaker in the past when asked. Neumann this week tweeted that he had just had a "long and very constructive conversation" with Tavares.
Tavares believes the combined entity could sell 5 million units a year in the midterm and reach a profitability level close to PSA's current target, which is a 6 percent margin. "There is an opportunity to create a European car champion resulting from the combination of a French company and a German company with a strong UK brand," he said.
Luca Ciferri and Peter Sigal contributed to this report