One year after getting the wheels in motion for purchasing the Opel brand, PSA Group chief executive Carlos Tavares says he has “no regrets” with the historic move.
Opel and its British equivalent, Vauxhall, were purchased from General Motors by the French conglomerate last year in a deal worth $2.7 billion. Considering Opel’s inability to make money under GM ownership, it was a risky move.
Speaking to Automotive News at the Geneva Motor Show, Tavares said the first positive results are now visible.
“We know we can turn around this company, and we are now seeing the first concrete results.”
Since taking ownership of Opel, PSA Group has managed to cut costs through new concessions with European unions while also sharing purchasing and other expenditures. Furthermore, PSA is shifting its technologies into Opel vehicles.
In the first six months of 2017, Opel lost roughly $460 million. Crucially, PSA Group has managed to slash those losses to $222 million in the last five months of 2017.
An analyst from LMC Automotive in London, Justin Cox, says PSA will see positive results from these changes quite rapidly.
“He’s in his research phase at the moment. 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,” Cox said.
PSA wants Opel to have positive free cash flow and operating margins of 2 per cent by 2020, rising to 6 per cent margins by 2026, and annual synergies worth a cool $2.1 billion.