PSA reveals strategic plans for Vauxhall and Opel

Posted on 10 Nov 2017 by Jonny Williamson

French carmaker Groupe PSA announced a strategic plan ‘PACE!’ to restore financial fundamentals and enhance sustainable competitiveness for its brands Vauxhall and Opel.

Vauxhall employs some 4,500 people at its plants in Ellesmere Port (Cheshire) and Luton (Bedfordshire) - image courtesy of Pixabay.
Vauxhall employs some 4,500 people at its plants in Ellesmere Port (Cheshire) and Luton (Bedfordshire) – image courtesy of Pixabay.

All PACE! initiatives will contribute to the goals of generating a positive operational free cash flow as well as a recurring operating margin for the auto division of 2% in a first phase by 2020 and of 6% by 2026.

The scheme did not show a specific reference to the UK’s Ellesmere and Luton plants, but it is designed with the clear intention to maintain all plants and refrain from forced redundancies in Europe.

The necessary and sustainable reduction of labour costs shall be reached with thoughtful measures such as innovative working time concepts, voluntary programs or early retirement schemes.

According to the scheme, combining strengths will unleash annual synergies on Groupe PSA level of €1.1bn by 2020 and €1.7bn by 2026. All actions will contribute to a lower financial break-even point for Opel/Vauxhall of 800,000 vehicles, creating a profitable business model whatever the headwinds may be.

Having full access to Groupe PSA technologies, Opel/Vauxhall will become a European CO2 leader. By 2024, all European passenger carlines will be electrified – offering a pure battery electric propulsion or plug-in hybrid version alongside efficient internal combustion engines.

By 2020, Opel/Vauxhall will have four electrified carlines on the market, including the Grandland X PHEV and the next generation Corsa as a fully electric vehicle.

The company will enhance its competitiveness by 2020 e.g. by reducing costs by €700 per car.

Efficiency of marketing expenses will be improved by more than 10%. Overall efficiencies will be increased by reducing complexity across all functions with a ratio G&A/revenue moving from 5.6% to 4.7% and an objective to bring the company towards industry benchmark in terms of wage cost/revenue ratio.

Opel’s CEO Michael Lohscheller said: “PACE! will unleash our full potential. This plan is paramount for the company, to protect our employees against headwinds and turn Opel/Vauxhall into a sustainable, profitable, electrified, and global company.

“Our future will be secured and we will contribute with German excellence to the Groupe PSA development. The implementation has already started with all teams eager to achieve the objectives.”

Lohscheller said: “Aligning architecture and powertrain families will substantially reduce development and production complexity, thus allowing scale effects and synergies, contributing to overall profitability.”