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Opel/Vauxhall: GM lost money over two decades; PSA made money in the first year

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#1 · (Edited by Moderator)
PSA profits from Opel/Vauxhall when GM couldn't; Peugeot's coming to the U.S.
GM lost money over two decades; PSA made money in the first year
ANTTI KAUTONEN
Feb 26th 2019
autoblog.com

France's PSA, the company behind Peugeot, Citroën, DS, Opel and Vauxhall, has some major news today: Its Push to Pass and PACE! plans have driven it to historic profitability. With 3.88 million vehicle sales across the group, PSA's sales are up 6.8 percent for 2018, and revenue has increased by 18.9 percent to $84 billion. Operating margin is a record 8.4 percent, and for the years 2019-2021, PSA has targeted a profit margin of 4.5 percent.

A remarkable part of this is that the recently acquired Opel and Vauxhall are profitable in PSA's first full year of ownership, after two decades of losses. We'd imagine the brands' former runner, General Motors, is looking into PSA's numbers quite intensely. The PACE! plan included cutting marketing costs, per-car costs and simplifying the Opel-Vauxhall engine and platform count by basing new models on existing PSA hardware.

Now that PSA is "sustainably competitive," there are more plans for expansion. PSA aims to become a truly global vehicle manufacturer, and this means increasing sales outside of Europe. The target is improving sales by 50 percent by 2021, and in the following years its brand portfolio is taking strides in new or improvable markets.

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#2 ·
Re: GM lost money over two decades; PSA made money in the first year

I'm thinking this is apples and oranges and the conclusion that PSA did something GM couldn't and should not be taken at face value. When GM sold Opel they did not transfer the underfunded pension liability if I recall, that's a huge piece right there. And what other accounting differences are there? And by not having that huge pension shortfall, PSA now has funds freed up to invest in product. If GM handed Opel to PSA with all the liabilities intact, I bet the story would be a lot different.

This smacks of a little more of a puff piece "look at what stupid GM couldn't do but we can" with little actual research done.
 
#3 ·
Re: GM lost money over two decades; PSA made money in the first year

I'm thinking this is apples and oranges and the conclusion that PSA did something GM couldn't and should not be taken at face value. When GM sold Opel they did not transfer the underfunded pension liability if I recall, that's a huge piece right there. And what other accounting differences are there? And by not having that huge pension shortfall, PSA now has funds freed up to invest in product. If GM handed Opel to PSA with all the liabilities intact, I bet the story would be a lot different.

This smacks of a little more of a puff piece "look at what stupid GM couldn't do but we can" with little actual research done.
Exactly correct. Was the author named Rupert?
 
#4 ·
Re: GM lost money over two decades; PSA made money in the first year

The pension deficit was ADDITIONAL to the operating losses that Opel/Vauxhall was producing - PSA's plan was to return Opel/Vauxhall to profitability within 3.5 years with an operating profit of 2% - Opel/Vauxhall has done that in 2 years less and produced an operating profit of 4.7%.

GM transferred a division making an operating loss which is now making an operating profit - I always suspected that some of GM's accounting was "smoke & mirrors" specifically by making Opel/Vauxhall fund development out of operating revenue and then double-charge the use of GM IP rights for development already paid for by Opel/Vauxhall - so there may well be differences in accounting which mean comparing apples and pears.
 
#10 ·
Re: GM lost money over two decades; PSA made money in the first year

[...]
GM transferred a division making an operating loss which is now making an operating profit - I always suspected that some of GM's accounting was "smoke & mirrors" specifically by making Opel/Vauxhall fund development out of operating revenue and then double-charge the use of GM IP rights for development already paid for by Opel/Vauxhall - so there may well be differences in accounting which mean comparing apples and pears.
I think sharing the (modular) platforms, engines and technology within PSA is one of the key points here. Opel seems much more integrated as it ever was under the umbrella of GM.

Btw, did you see the new Peugeot 208? Some handy little car. I hope the new Corsa looks as good as this.

 
#6 ·
Re: GM lost money over two decades; PSA made money in the first year

I doubt that anything changed substantially in PSA's operations in so short a time. If it's now profitable, it's not likely through some miracle worked by Peugeot. Perhaps accounting differences with GM taking various charges and declaring an Opel loss.
 
#9 · (Edited)
Re: GM lost money over two decades; PSA made money in the first year

It’s just more thinly veiled ‘America sucks and Europe, China, Australia, etc is awesome’ nonsense. The reality is that GM undoubtedly had liabilities/negative fiscal realities with Vauxhall/Opel that they couldn’t simply ignore while they owned those brands but which a potential new owner doesn’t necessarily have to assume and/or simply isn’t subject to in a sell off. A sell of in such a reality would end up instantly bettering the position of PSA with these brands versus the previous owner. That creates a situation where the brands have greater actual value to the buyer than they do to the seller allowing GM to potentially fetch a higher price than the actual value the brand holds for them while also allowing GM to more quickly deal with any liabilities they have retained in the process.

We saw some of this with the sale of JLR to Tata by Ford. Unfortunately, the honeymoon phase a sale like that creates is always temporary and, if the remaining flaws that led to the problems the seller once had with said brand aren’t dealt with, the new owner can expect to be dealing with those issues themselves at some point. And indeed we are now seeing this problem with JLR as the honeymoon phase has ended. We’re even hearing vague rumors that Tata might be looking to sell off JLR.

PSA needs to make the most of this phase and move very, very quickly or, just like JLR, these early victories which seem easy to come by now will quickly gave way to something else.
 
#12 · (Edited)
Re: GM lost money over two decades; PSA made money in the first year

I’m still amused that the cheering for PSA we’ve seen thus far completely ignores the fact that PSA now is in possession of three distinct mainstream brands (Opel and Vauxhall don’t really warrant distinct mentions here) Is there another automotive manufacturer that owns that many mainstream, volume outlets all of which will be competing in the same markets? I don’t think so. And this without a real premium brand in the fold? Considering that we are discussing an automaker primarily competing in a market where volume brands are struggling with profitability and premium brands are on the rise how is this not giving people pause?

That should absolutely be worrisome and, long term, will pose serious problems if not dealt with. And I have no idea how you would posssibly deal with that while keeping all three brands? On the other hand Peugeot returning to the U.S. market is a great idea. I expect Opel to follow if logic prevails here.
 
#13 ·
Re: GM lost money over two decades; PSA made money in the first year

I’m still amused that the cheering for PSA we’ve seen thus far completely ignores the fact that PSA now is in possession of three distinct mainstream brands (Opel and Vauxhall don’t really warrant a distinct mentions here) Is there another automotive manufacturer that owns that many mainstream, volume outlets all of which will be competing in the same markets? I don’t think so. And this without a real premium brand in the fold? Considering that we are discussing an automaker competing in a market where volume brands are struggling with profitability and premium brands are on the rise how is this not giving people pause?

That should absolutely be worrisome and, long term, will pose serious problems if not dealt with. And I have no idea how you would posssibly deal with that while keeping all three brands? On the other hand Peugeot returning to the U.S. market is a great idea. I expect Opel to follow if logic prevails here.
VW Group have VW, Seat and Skoda competing in most markets - more if you include Audi - VW Group does it successfully - GM used to do it with Chevrolet, Pontiac, Oldsmobile and Buick but ultimately unsuccessful with that many brands.

PSA Groupe's initial expansion will be Peugeot into North America, Opel into Russia and Citroen into India
 
#14 ·
Re: GM lost money over two decades; PSA made money in the first year

Anything American is bad.. GM is a true representative of America.. and how people feel about America. And many AMERICANS do little to boost the reputation of either. Its pathetic.. and it makes me sick. Swear to God I wish that I take back my service to this country.

GM was starting to recover right before they decided to sell to PSA. 2014 -$1.4 billion, 2015 -$813 million, 2016 -$257 million.. the decision was made to get rid of GM Europe because it was getting ready to run head first into negative headwinds in Europe, including Brexit. I'm surprised that other NON-European companies didn't follow. PSA, a French company is partially owned (14%) and subsidized by France.. similar to VW, which is actually partially owned by the German government (20%). They are literally GOVERNMENT MOTORS.. One must realize that does not strike a negative in European countries.. unlike in America
 
#16 ·
Re: GM lost money over two decades; PSA made money in the first year

GM is a true representative of America.. and how people feel about America.
Be careful not to conflate GM with America.

The United States of America is a nation. Or to be more precise, a nation state. By contrast, General Motors is a global company. It doesn't exhibit any particular affinity to the nation state in which it's headquartered (or for that matter any nation state in which it operates), except in the context of sales and marketing. GM exists to serve its shareholders, not necessarily the citizens of any particular nation state.

Same goes for Groupe PSA and France.
 
#53 ·
Face it - GM management was not capable to make a profit and PSA is. Carlos Tavares knows what he is doing. He did it with Peugeot and Citroen and now again with Opel.
Opel cars had to be boring just to match American/Chinese taste and in Europe we do not tolerate that. Cars for those markets in terms of technology and material quality are years behind Europe. That ***** can be sold overseas but not in Europe. Europeans have sophisticated taste for details and design which is not common for other markets. GM did not want to invest in that and to bother with it so the best option is that they decided to leave.
For all of you who has something against Opel - just look at Chevrolet in Europe. They failed miserably. All cars they sold people bought just because it was well known they use older generation of Opel technology. Even if Opel results are not too good now, Opel is well known brand and they build up great reputation. Cars have good residual value and are known as very reliable.
New design will make them a huge hit in Europe. Just compare GM Corsa F test mule and PSA Corsa F test mule. Shape of new car looks stunning and 10x better than the old one.
 
#56 · (Edited)
Yeah, I think Europe is a tough market with a lot of issues but, if they can keep the EU from imploding, the potential there is still staggering. I don’t think PSA vs GM is an apples to apples compare by any means here, PSA did not just magically figure out how to make an existing brand profitable overnight. It is far more complicated than that and GM deserves credit for making sure that Vauxhall and Opel were sold off as healthy, going concerns. And of course I do hope that PSA succeeds as I have been something of a fan of French cars for some time. They don’t get enough credit given how good some of their product has been in my opinion.

Of course the thinly veiled anti American sentiment some people are using this to convey is just stupid, but stupid is as stupid does. I’m peeved at Ford Australia for the new Ranger, but I don’t have an issue with Australia or even Ford Australia in general, just that specific product and the scenario around it. Some people seem to have a tough time separating those things.

In contrast to Europe, I just can’t see a positive future in China anytime soon unfortunately
 
#64 ·
So PSA did massive layoffs to return Opel to profitability. Here’s a question, really I don’t know the answer: if GM had held onto Opel and laid off 1000s of people like PSA did, wouldn’t there have been strikes, slowdowns, etc., against GM? Did the fact that Opel was sold make PSA’s job easier in negotiating with the unions? Any info appreciated.
 
#68 ·
Its been jokingly said in the past that due to the high cost of providing health care to employees, that GM was a health care company that made cars. I assume PSA's bottom line is better since they were free of the pension liability and maybe a reduced health care liability due to laying off people?
 
#70 ·
... I assume PSA's bottom line is better since they were free of the pension liability and maybe a reduced health care liability due to laying off people?
A reduced healthcare liability? What healthcare liability? This is Europe we're talking about = free/taxpayer funded universal healthcare for everyone.

Yes, GM did offer private health insurance to their executives (I think from pay grade 9) in some European countries, but such costs would be minimal.
 
#69 ·
Were any of the problems with Opel due to the US accountant viewing the operation in US dollar terms rather than the Euro which is what Opel's workers get paid in. I suspect that the reason for Holden stopping manufacturing was using the USD only and not the currency native to the operation.
 
#73 ·
PSA is making the moves GM had to make 10+ years ago but was too stubborn to make.

No reason for the number of engines that GM and Opel created, or the platforms that were never utilized on a global basis.

As I have said many times GM had to implement a Buick/GMC/Holden/Opel/Vauxhall global strategy that sold the "same" products globally but used local market brands and shared those platforms with Cadillac and Chevrolet for NA sales. Would have worked and addressed most of the issues GM had with Opel. GMC had to become the global Commercial Vehicle brand and sold GMC Canyons in Europe at Opel/Vauxhall dealers and would had been able to grow sales in a segment that is now becoming viable. This would have made the most of the available product and allowed GM the global volume to create it's own Global Commercial Vans.
 
#74 ·
All Opel platforms were used by GM globally - Gamma, Delta, Epsilon and their derivatives - with one exception, the SCCS from the Fiat Alliance which wasn't used by GM globally - their multiplicity of engine ranges was due in part to GM changes in policy for diesel responsibility, GM, then Isuzu, then Fiat, back to GM.

GM has had several attempts to launch Cadillac brand in Europe, all failed - it attempted to launch Chevrolet brand in Europe, it failed - call me cynical but I don't see that GMC would have launched any better.
 
#77 · (Edited)
It's easy to make an instant profit when all of your pensions are suddenly being paid out by someone else.
It just goes to show what an albatross that they are around GM's neck.

It's an albatross that will gradually disappear and be nearly entirely off the books in the 2030's.
 
#79 ·
Successful Opel Light Commercial Vehicle Offensive: Significant Gains of 35 Percent in First Quarter



Rüsselsheim. Opel’s light commercial vehicle offensive is gaining traction: The Rüsselsheim-based carmaker registered global LCV sales of almost 33,000 units in the first quarter of the year – an increase of 35 percent compared to the same period of 2018. The registration market share in Europe (E30) was up by 0.6 percentage points from January to March and is now at 4.7 percent. Opel has set itself the target of increasing LCV sales by 25 percent by 2020 in its PACE! company plan.

Customer demand for both the Movano (+18%) as well as the Vivaro (+33%) was significantly stronger than last year. However, the LCV variant of the new Opel Combo was the main driver behind the growth. The “International Van of the Year 2019” was sold around 6,900 times in the first three months of the year – an impressive increase of 68 percent compared to sales of its predecessor in the first quarter of 2018.

“Our LCV business is growing on a broad front. All of our LCVs are more popular than last year and we have managed to increase our market share in almost every European market. This shows that our measures are effective. We have strengthened our marketing and now all dealers have commercial vehicles in their showrooms,” said Xavier Duchemin, Managing Director Sales, Aftersales and Marketing.

Order intake – the foundation for future sales – has also shown considerable increases in recent months. “The pleasing volume of orders means that 2019 is promising to be a good year,” said Duchemin. The new Vivaro will give Opel even more momentum. It will be launched later this year and an electric version will be available from 2020.

Link: https://int-media.opel.com/en/successful-opel-light-commercial-vehicle-offensive-significant-gains-35-percent-first-quarter
Looks good to reach the PACE! target for Opel.
 
#90 · (Edited)
How ever LCV variant of the new the new Opel Combo was the main driver behind the growth 68% increase .

Great to see the new Opel thats both very practical & roomy at long not normally found in a Opel design of the past, the Combo that was a PSA French design based on the Citroen Berlingo & Peugeot Partner/Rifter designs
Absolutely love the truck like snub nose & the very practical Combo 7 seat crew cabs they make great taxis and company staff movers that are also big hit with families that buy the Combo Life.

Great to see Opel commercials are on the mend in Europe, absolutely love the Combo life l just love practical cars if all cars are going to be fitted with speed limiters in the European Union you might as well have something spacious a cramped Ferrari fitted with a speed limiter won't get you thier any faster than a comfortable roomy Combi Life.

Great to see Opel doing well for themselves benefiting from great practical roomy French car/van designs, but they are still light years behind Ford sales in commercials in Europe.

[IMG]https://upload.wikimedia.org/wikipedia/commons/thumb/9/9c/2018_Opel_Combo_Life_Leonberg_IMG_0158.jpg/2560px-2018_Opel_Combo_Life_Leonberg_IMG_0158.jpg






Great to see Opel doing something practical again at long last

 
#98 ·
Opel Increases Market Share in Europe

Rüsselsheim. The upward trend at Opel continues: In the months January to August, the brand with the Blitz has slightly increased the market share in the important European market (passenger car and LCV registrations; E30) to 5.42 percent. The Rüsselsheim-based company also recorded a growing market share in the single month of August.

“We have improved our market share in Europe in an increasingly demanding environment while at the same time consistently focusing on profitable sales channels and growth segments. That is a good result, and we can confidently look ahead to the rest of the year,” said Xavier Duchemin, Managing Director Sales, Aftersales and Marketing. “Opel/Vauxhall delivered around 700,000 vehicles worldwide as per end of August. Our attractive and efficient models and a strong presence in the important SUV segment are the basis for this success.”

In the course of the year, Opel achieved improvements in several countries: On the German market, Opel increased new passenger car registrations by 3,200 units (+2.1%), which correspondents to a slightly increased market share (now 6.3%). Opel/Vauxhall also improved its market share (Passenger cars and light commercial vehicles) in the other big European automotive markets France, United Kingdom, Italy and Spain.

The company expects further impetus from the comprehensive model offensive, which will be driven forward consistently. By the end of 2020, Opel will be launching eight new models and pushing the pace of the electrification of its product portfolio.
...
Source: https://int-media.opel.com/en/09-09-opel-increases-market-share-in-europe
 
#100 ·
I thought that there were a great deal of lay-offs and Gov't incentives thrown in this changeover. One such example was Link

and more to come..

PSA Group’s German car-making division Opel will cut up to 4,100 jobs, joining rivals around the globe in retrenching amid a sales slowdown and technological disruption.

The cuts will be focused at German sites in Ruesselsheim, Eisenach and Kaiserslautern, where Opel will reopen a voluntary leave program for employees to eliminate 2,100 positions by 2025, the company said in a statement Tuesday.
Bloomberg


Maybe GM figured enough was enough. I don't see incompetence.. just a lack of patience and will to be the bad guy,.. .as they are so often labeled. Besides.. it allows them to focus on the core business
 
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