GENEVA — "No regrets." That's PSA Group CEO Carlos Tavares' assessment one year after striking a $2.7 billion deal for Opel and Vauxhall, General Motors' stubbornly unprofitable European brands.
Tavares says PSA has begun to stanch the flow of red ink at Opel after nearly two decades of losses under GM and pave the way for sustainable profits. He has cut costs by negotiating concessions with European unions and sharing purchasing and other expenditures. There have not been large-scale layoffs or factory closings, as many had feared.
By design or necessity, PSA is moving swiftly to transfer its technology to Opel vehicles, a move that Tavares said is accelerating synergies.
"We know we can turn around this company, and we are now seeing the first concrete results," he said this month.
Other initiatives are a work in progress. A high percentage of Opels are sold through unprofitable channels such as short-term rentals. Sales have fallen sharply in key markets including the United Kingdom, though analysts say that is partly a result of reducing incentives.
Crucially, the red ink hasn't disappeared — Opel lost €179 million ($222 million) in just the last five months of 2017. However, that's an improvement from the $460 million that sources said Opel lost in the first half of the year, according to Automobilwoche, an affiliate of Automotive News.
"He's in his research phase at the moment," said Justin Cox, an analyst at LMC Automotive in London. "He's attacking costs, pooling purchasing power and leveraging engineering. Those are the kinds of things you can put in action right away, and you will see dividends quite speedily."