As Carlos Tavares prepares to begin the grand experiment of integrating Opel/Vauxhall into the PSA Group, he faces a vexing problem: How to avoid, or at least minimize, costly and disruptive plant closures and layoffs as he seeks to find billions of euros in savings and synergies. One area where Tavares may have some flexibility is in Europe's light commercial vehicles sector, which is a growing market that experts say has profit margins of about 9 percent, in line with those for SUVs and two to three times better than those from passenger cars.
LCV output in Europe is governed by a complex web of development alliances, automaker supply agreements and joint ventures. However, if Tavares can modify or exit existing arrangements, and if model cycles align, he might be able to bring more than 150,000 additional units of production in-house to help boost output at underutilized PSA and Opel plants. A look at PSA's alliances with Opel, Renault and Fiat Chrysler Automobiles suggests that Tavares has several options to help achieve his stated goal of finding 1.7 billion euros in synergies between his company and Opel by 2026.