Free From GM, Opel’s Suddenly Back in (the) Black

The German automaker that cranks out Buick Regals and, until this summer, Buick Cascadas for American consumers is suddenly flying high, distancing itself from its money pit days under former parent General Motors.

After trying and failing to return the Opel (and sister brand Vauxhall) to profitability, GM offloaded the automaker to the French in August, 2017. In cutting its losses, Opel’s former parent put the brand’s future in the hands of PSA’s shrewd CEO, Carlos Tavares, who then enacted the same cost-cutting turnaround plan he performed on his own company. The financial about-face was a quick one.

As Automotive News Europe reports, Opel’s 2018 earning report shows a “historic” profit of $979 million — the automaker’s first in two decades.

PSA, owner of the Citroen, Peugeot, and DS brands, wasn’t in the mood to keep a cash-sapping dud around just for production volume bragging rights. It laid out its intentions in a strategic plan, then went about cutting 3,700 manufacturing jobs in the German heartland, transferring 2,000 R&D staff to France in the process. Declining models were put on the chopping block, incentives were slashed. Inventory tightened up.

What’s surprising to many is the speed of Opel’s turnaround. From a $204 million loss at the end of 2017, the German automaker returned to profitability the following year. Target year for that achievement in PSA’s plan? 2020.

Not only that, the plan forecasted a 2-percent operating margin by the target year. 2018’s results shows a margin of 4.7 percent.

While Opel is now free of American influence, Americans are not yet free of Opel-built vehicle. The slow-selling Cascada convertible disappears from the Buick lineup later this year (dealers were asked early this year to get their last orders in), and the new-for-2018 Regal and its TourX wagon sibling continues on. In late January, reports emerged that Opel, taking its orders from PSA, plans to severely dial back production at its Rüsselsheim plant, home to the Buick Regal/Opel Insignia/Vauxhall Insignia. Production is said to fall to 68,000 vehicles per year from 123,000.

The newly revamped Regal saw its sales rise 22.1 percent in the U.S. last year, though a volume of 14,118 units still placed the midsize sedan/hatch and wagon behind even the now-defunct Buick LaCrosse.

a version of this article first appeared on TTAC

Comments