In order to improve on his company’s fortunes and move forward, Opel CEO Michael Lohscheller began by slashing fixed costs and simplifying the product portfolio.
After telling Autonews Europe that his first order of business was to stop serving cookies at meetings as a symbolic gesture related to heath, he assumed a more serious tone and talked about cutting upper management ranks by 25 percent.
“You have to clean the escalator from the top,” he said. “People realized this is serious. Costs are your best friend, because that is what you can control.”
As a result, product costs per vehicle came down 367 euros (about $410), more than half of the 700 euro ($780) reduction first achieved under Opel’s old PACE turnaround plan from 2017. Another key was to quickly assimilate PSA’s architecture while ditching GM platforms. Under GM, Opel was operating nine platforms in total, whereas with PSA it will end up with just two in a few years.
Meanwhile, ten engine families will be reduced to just four, added the CEO. “That’s a massive complexity reduction with huge, huge benefits.”
At the same time, GM-engineered models such as the Adam are being phased out, with a focus on new PSA-based models like the next-gen Corsa (Opel’s best-seller) or the Mokka crossover – both of which will have electrified power trains as options.
Europe is the key
Even though Opel has global ambitions and it is planning on restarting sales in Russia at the end of the year, Lohscheller admitted that having a Europe-based owner was always going to be the key to turning things around.
“What made a big difference was that within PSA, Europe is the core business, and this focus on Europe made a lot of things easier. In the past, we tried to find global synergies, which sometimes are not so easy to find. ‘What are really the synergies between an Opel Corsa in Croatia and a pickup truck in Idaho?”
“I keep saying, ‘Paris is closer than Detroit ever was’. It’s a summary of how we do the business now.”
After losing nearly 1 billion euros ($1.12 billion) per year under GM over the past 20 years, Opel is finally profitable again thanks to PSA. Last year, the German automaker’s operating profit stood at 859 million euros ($960 million), the highest it’s ever been in the company’s 157 year history.