Despite declining sales and a difficult economic environment due to the coronavirus pandemic, Opel/Vauxhall was able to record a significant annual profit in 2020, its third since General Motors sold the brands to PSA Group in 2017. CEO Michael Lohscheller has discontinued GM's higher-emission legacy models and moved into full electrification with the new Corsa and Mokka. Lohscheller explained the brands' next moves in an interview with Automotive News Europe Associate Publisher and Editor Luca Ciferri, News Editor Peter Sigal and Correspondent Nick Gibbs.
How was Opel able to make a profit in 2020 despite all the difficulties created by the pandemic?
It was a very challenging year, obviously, because of COVID-19. Still, it was the third year in a row that Opel achieved an operating profit, of 527 million euros ($627 million), which is a margin of 4.1 percent. What was also important is that we paid out a 500 euro success bonus to all Opel/Vauxhall employees. It was only the second time in the last 30 years that we did that. I would say there are three reasons why we made a profit: First of all, the new Corsa [small car] is a big success. It was the best-selling small car in Germany in 2020, held a top position in the UK, and did very well across Europe. Second, we worked very hard on channel mix, improving sales to private buyers and being less strong in rental, and we also emphasized Motability [the government aided leasing program] in the UK. Third, we did a very good job in terms of overall cost discipline.
What do you expect for this year, both for Opel and the overall market?
We were much more optimistic at the end of last year that vaccination programs would work, would be put in place very fast and that the market would recover. But now here we are: After the first quarter of 2021, Germany is in a strong lockdown; the UK was in a lockdown. So it's very difficult to predict, but obviously we do hope that things improve, that vaccinations will be successful. It’s also important to continue to have profitable growth. After the big success of the Corsa last year, the key focus for 2021 will be the Mokka [small SUV].
How much is click and collect disrupting potential sales in Germany and the UK ?
If we compare this lockdown period to the first one we had last spring, it's much, much better. I have visited many dealers this year and they are better prepared in terms of how to do business. We also see it in the absolute sales numbers -- they are doing much better than during the first lockdown. We will see digitalization as a key theme for the distribution side going forward. The most important thing is that the sales journey is efficient and easy for the customers.
On the distribution side, many automakers are shifting or considering a shift to an agency model. What is Opel's view on this?
I would say distribution costs are very high in the industry, so I think we have to do something about it. For us, online sales is a key topic. Opel finalized new dealer contracts in 2018 that also allow online sales. So we feel we are well prepared for this. The future will go more in the direction of digital, for sure, but dealers will continue to be crucial partners.
How many battery-electric models and plug-in hybrids did Opel sell in 2020? And what are your plans for this year?
Counting plug-in hybrid and pure electric, we had about 35,000 sales, which is around 5.5 percent of all sales – and clearly more than ever before. We have seen this rate increase in January and February. But this is just a starting point.
Did you reach your CO2 target in 2020, and what is the target for this year, when you cannot deduct the 5 percent of high-emissions vehicles?
PSA as a group was compliant in 2020 and Opel/Vauxhall made a big contribution to that. You might recall that Opel/Vauxhall was actually way behind in terms of CO2. We had very heavy architectures [from GM] that did not allow electrification. We have improved a lot, first with much more efficient internal combustion engines, and we have changed our portfolio pretty dramatically. Some decisions were not so easy, but we did it because I believe that CO2 is really the new currency of the industry. Of course, 2021 is much tougher than 2020 and there will be a further reduction of emissions. Opel will contribute its fair share to the group.
Does Opel need to address the minicar segment in the future or can you cover those customers by diversifying your small car range?
In the past, we had the Opel Adam and Karl/Viva [minicars], and the Corsa. Now we have focused everything on the Corsa and this works really well. We have captured a lot of customers with the Corsa, which is our best-selling car. Of course, we always look at trends in the market, and whether an A-segment [minicar] car is interesting to buyers.