The Count of Monte Cristo, the celebrated French novel about unjustly imprisoned protagonist Edmond Dantes, has some interesting parallels with Opel's turnaround plan under PSA Group. Locked up for decades in Europe by former parent General Motors and forced to accept decisions against its own best interests, the money-losing German carmaker believes it will finally thrive now that its new French owner has freed it from its former shackles.
Restrictions on everything from where Opel could build its cars to where it was allowed to sell them culminated in underutilized European plants, poor cash management, currency risks and a never-ending series of restructuring plans. Tens of thousands of jobs were cut as one factory after the other was shuttered to save costs. This, however, didn't prevent Opel from bleeding red ink every year. The automaker and its British sister brand, Vauxhall, amassed $19 billion in financial losses in total since the turn of the century.
At the end of July, GM handed over control of Opel and Vauxhall to PSA CEO Carlos Tavares in a deal the Portuguese manager has said would give his group scale, end its dependency on purely French brands and create a true European champion with a combined 4.3 million cars sold annually and automotive revenue amounting to 55 billion euros.
Tavares and Opel CEO Michael Lohscheller outlined three overarching pillars for the automaker's revival during a briefing last month at Opel's Ruesselsheim headquarters. The objectives aimed at fixing deficiencies in GM's management are: 1) a global push into new markets, 2) fewer imports into Europe and 3) a CO2 road map that ensures Opel can comply with EU fleet targets by 2021.
"We are moving from a world where the center of decision is Detroit to a world where the center of decision is not Paris, it's Ruesselsheim," Tavares summed up.
Most importantly for a workforce demoralized by constant cut backs, the PSA boss said that German management made a commitment to prevent both plant closures and compulsory layoffs. Instead he wants to eliminate costly overtime and reduce the workweek in most cases to 35 hours from 40 previously.
Wasteful duplication and complexity will also be targeted, lowering the number of passenger car platforms from the current nine that underpin 10 model lines to just two by 2024: PSA's architectures CMP and EMP2. Powertrain families will also be thinned out and the number of engine-transmission combinations slashed by 40 percent.