When PSA Group bought Opel/Vauxhall from General Motors in 2017 it took over a company with a very well-known big problem. Opel had annual operating losses of nearly 1 billion euros a year.
There was also a less obvious but equally troubling issue: Opel was way behind in preparations to meet tougher European Union CO2 emissions reduction targets that start to take effect next year, leaving the company at risk of facing billions of euros in fines.
"Let me be very clear," CEO Michael Lohscheller said in November 2017 at Opel's headquarters in Russelsheim, Germany, as he announced the PACE turnaround plan. "When we started working on this plan we quickly came to the conclusion that Opel was not ready to reach the CO2 targets set by the EU for 2020 and 2021. The potential consequences for the future of the company would have been dramatic," he added.
Fast forward two years and Opel is not only profitable, it also has an achievable plan to meet its emissions targets, Lohscheller told Automotive News Europe during an interview in May.
At the end of 2018, Opel's emissions were still far higher than PSA Group's other main brands, Peugeot and Citroen. According to analysts, Opel/Vauxhall's fleet CO2 average was 126 grams per kilometer, compared with 108g/km for Peugeot and Citroen. Opel's target as a brand will be about 94g/km of CO2, analysts said.
That means it will have to reduce emissions across its lineup by an average of more than 30g/km, or 25 percent. If not, it could face up to 2.65 billion euros in fines, according to a study by ISI Evercore.
ISI also estimates that it will cost 1,260 euros per vehicle for Opel to meet emissions targets, compared with 740 euros for Citroen and 667 euros for Peugeot.
Lohscheller said Opel would reach its emissions goal by 1) purging the lineup of vehicles based on GM architectures, which are heavier and higher-polluting compared with PSA vehicles, and 2) by rolling out electric and plug-in hybrid versions of its most popular models.
"The new cars on PSA architectures deliver a massive improvement in emissions -- and then we bring electrification on top," Lohscheller said. "To be very clear: We will be compliant as of 2020."
At the end of last year, most Opel models were still on GM platforms including the best-selling Corsa small car and Astra compact, the Mokka X small SUV, the midsize Insignia, the Adam minicar and the Zafira compact minivan.
Average fleet weight was 1,345 kilograms, compared with 1,204 for Citroen and 1,245 at Peugeot, according to ISI.
By the end of 2020, the lineup will look very different, Lohscheller said.
The current Corsa will be replaced at the end of this year by one based on PSA's CMP architecture. Next year will see a new Mokka, also on CMP.
The Adam, Cascada convertible, Karl minicar and current Zafira are being phased out, leaving only the Astra and Insignia on GM-based platforms. The Astra is due for replacement around 2022.
The Corsa will have a full-electric version available next spring; a plug-in hybrid Grandland X is about to enter the market, and the next Mokka X will also have a battery-powered variant.
By 2024, Opel will have electrified versions of every vehicle in its lineup, according to the PACE plan, whether hybrid or full-electric. "We have changed a major part of our product portfolio," Lohscheller said. "Our emissions were relatively high, but that is based on the former portfolio of older products."
He said it was a matter of customer trust for Opel/Vauxhall to meet its emissions targets. "We cannot imagine that we would offer noncompliant cars and have to pay a penalty," Lohscheller said. "Customers will say, 'Why should I buy from this brand, they can't even meet the legal requirements'? That's why we are doing all the portfolio changes, why we are investing so much in electrification," he added. "For us, it's an absolute must, and we will achieve it."