FRANKFURT -- PSA Group CEO Carlos Tavares began preparing the ground for deep cuts to turn around the automaker's newly acquired Opel/Vauxhall business.
In a round table interview with German journalists at the Frankfurt auto show, Tavares said it is clear that Opel cannot continue in its current form without cost-cutting measures and significant efficiency gains
"The only answer for an Opel future is to make the company profitable. The only thing we cannot afford is the status quo," he said.
Tavares did not provide any information on the extent of potential job cuts or factory closures at Opel.
He said, however, that much of the job cuts had already been completed since Opel's existential crisis in 2009 when then-owner General Motors almost sold its European business to Canadian car parts manufacturer Magna International only to change its mind at the last minute.
Tavares said Opel currently employs about 3,000 engineers mainly for projects that are done solely for GM. This does not mean that all these valuable employees are no longer needed, he said. "With Opel, our development capacity has grown by 50 percent. We now have the great opportunity to use this development power."
Tavares praised Opel's 38,000 employees. "People at Opel are the solution, not the problem. They take confidence when they see what we've been developing at PSA over the past four years."
In another round table, Tavares said: "Our strategic stance is that we are not building the Opel turnaround plan, Opel teams are building the Opel turnaround plan. We support with our best practices from the Back in the Race plan, with the methodology that we use to create and deploy the plan, but it is their plan."
Tavares said PSA will urge Opel to improve its sales to individual customers.
Opel's new business plan will be presented in November.
Brexit fears
He also said it is hard to decide upon strategy for Opel's UK sister brand, Vauxhall, given lack of clarity over Brexit.
"The Brexit question for us is still something we are working on with different scenario planning. We don't know how Brexit is going to unfold. We have to plan for different kinds of scenarios -- stronger custom duties or no custom duties, high level of local content or low level of local content. All of this completely changes the business model for Vauxhall and for Peugeot and Citroen as well."
Tavares said he would like to see guidance from the UK government and the European Commission over Brexit.
"We are in a business where the lead time is three to five years so we need to prepare for that. If we could select a specific scenario by Christmas then we could implement it concretely on real terms, with investments, product allocations and manufacturing changes," he said.
EV components
Separately, PSA is considering moving the production of electric vehicle components back to within the company, its strategy head, Patrice Lucas, said,
"We are having some thoughts regarding 'make or buy' concerning the electric chain of motors. We will move the components part back to within the company, but not the battery chemicals part," Lucas said at the Frankfurt auto show on Tuesday.
PSA said it aimed to finalize a car financing deal with bank BNP Paribas by the end of the fourth quarter. Earlier this year, BNP Paribas announced the acquisition of Opel/Vauxhall's financing arm for 900 million euros ($1.1 billion) with PSA.
The acquisition was announced alongside PSA's agreement to buy Opel from General Motors in a deal valuing the brand at 2.2 billion euros.
Reuters contributed to this report
