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.
[Image: General Motors]
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- Del My father bought GM cars in the 60's, but in 1971 he gave me a used Datsun (as they were called back then), and I'm now in my 70's and am happy to say that GM has been absent from my entire adult life. This article makes me gladder than ever.
- TheEndlessEnigma That's right GM, just keep adding to that list of reasons why I will never buy your products. This, I think, becomes reason number 69, right after OnStar-Cannot-Be-Disabled-And-It-Comes-Standard-Whether-Or-Not-You-Want-It and Screw-You-American-Car-Buyer-We-Only-Make-Trucks-And-SUVs.
- 3SpeedAutomatic Does this not sound and feel like the dawn of ICE automobiles in the early 20th century, but at double or triple speed speed!!There were a bunch of independent car markers by the late 1910’s. By the mid 20’s, we were dropping down to 10 or 15 producers as Henry was slashing the price of the Model T. The Great Depression hit, and we are down to the big three and several independents. For EVs, Tesla bolted out of the gate, the small three are in a mad dash to keep up. Europe was caught flat footed due to the VW scandal. Lucid, Lordstown, & Rivian are scrambling to up production to generate cash. Now the EV leader has taken a page from the Model T and is slashing prices putting the rest of the EV market in a tail spin. Deja vu……
- Michael Eck With those mods, I wonder if it's tuned...
- Mike-NB2 I'm not a Jeep guy, but I really, really like the 1978 Jeep Cherokee 4xe concept.
When no choice is available, the B&B can maintain a lively discussion about even some little European car maker. That says breadth and scope of knowledge.
It is time to fire Barra and replace her with Carlos Tavares. Barra incompetence has gone on long enough. She has decimated GM's once impressive car line. If you want any indication on where GM stands today look no further for than lackluster Cadillac XT6.