Closing plants and laying off workers would be the quickest and easiest way to fix Opel problems, but PSA Group CEO Carlos Tavares wants to avoid that. When asked how he plans to end decades of losses at Opel and its UK sister brand Vauxhall without taking those steps he said, "The only honest answer is to say, if we increase the level of performance [at Opel] then we are safe." Tavares was speaking to reporters in Geneva last month.
The CEO also does not plan on micromanaging Opel as it restructures, instead he wants PSA to help the automaker's team, led by Opel Group CEO Karl-Thomas Neumann, to reach the necessary benchmarks. "[We are not entering] Opel with a precooked plan," Tavares said. "We intend to create a framework within which -- with the appropriate methodologies -- the Opel and Vauxhall employees and management can build their own turnaround plan that they will hopefully successfully implement, and they will be the winners of this turnaround." Opel will get to make its own decisions regarding brand management, product, design and pricing. "But that does not mean that we are not going to have conversations about these topics," Tavares said.
Analysts see Tavares' turnaround ambitions for Opel, which has lost a combined $9 billion since 2009, as challenging but achievable. "PSA's planned takeover of Opel is massively high risk, enormously complex and involves taking on two very weak brands, but we believe it has a significant chance of success," said Max Warburton, a London-based auto analyst at Sanford C. Bernstein. "Opel margins can rise toward PSA's levels in a few years." PSA's automotive operating profit widened to 6 percent last year from 5 percent in 2015.