Opinion: Can the PSA Group really save Vauxhall and Opel?


Vauxhall and Opel has been haemorrhaging money, but so was the PSA Group in 2013, and that’s now the envy of the car industry

To take a company that has underperformed – some might say failed – for at least 15 years, and which loses around £3m a day at present, and make it profitable within three and a bit years sounds remarkable.

But the detractors would do well to remember what the PSA Group has achieved before.

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When Carlos Tavares took the helm at Peugeot, Citroën and DS back in 2013, the company was on its knees, selling off everything it could lay its hands on just to stay afloat, from property in Paris to its historic fleet of cars to a large proportion of itself. Its operating margin was -2.8%, which in simple terms means it was losing billions.

In the first six months of this year, that same company had an operating margin of 7.3%, among the very best for a mainstream manufacturer and the envy of even Volkswagen and Skoda, which exist in a far larger universe. So yes, unequivocally, it can be done.

But you didn’t have to read too far between the lines to understand that Tavares’s team of newly empowered management needs to move fast and without obstacles. Be in no doubt that for all today’s platitudes, sweeping, painful change is on the way.

“When there is the willingness, vision, execution capability and convergence of responsibility of all stakeholders, this kind of turnaround is possible,” said Tavares, taking a barely veiled swipe at labour union bosses, suppliers and more.

“It is my belief that the unpopular leaders of today will be the heroes of tomorrow. Managing a car company, taking all the right decisions to deliver recurring profit, is not an easy task, but it is a rewarding one. There will be decisions people don’t like but which will work. The goal is that we can hand over a company to the next generation of leaders that works and that has the ability to invest in its own future.”

While the goal may be no factory closures, for instance, it’s pretty clear that unless everyone involved bends to the detail of today’s plan – much of it neither disclosed nor discussed – that is far from guaranteed.

As Tavares pointed out at the start of the conference, creating the plan means only that 5% of the job is done. Enacting it is the 95% still to go, and in a period of turmoil for Europe and the European automotive industry, there isn’t going to be much room for compromise.

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Source:: Autocar