Since the GM-PSA alliance was announced, industry watchers have been waiting for detail on its implications for the two companies’ European operations. With both companies making it clear from the outset that the alliance has nothing to do with either’s restructuring, it is unsurprising that Opel’s new ten-point plan “to quickly improve profitability” includes almost no reference to the alliance.
Examining the plan in detail, however, reveals relatively little that wasn’t already known (even if only to those in the know) or really radically new. The new engines were widely known to be on their way, as were plans to expand exports to Australia, Turkey, Russia and China.
New vehicle investment (GM is investing €11bn in new models) is in itself not unusual for a vehicle manufacturer – nor is increasing profit margins through reducing material costs and manufacturing complexity.
Can German factories make relatively cheap Chevrolets more economically than Korean plants?
Some parts of the plan are nonetheless intriguing. GM Europe President Karl-Friedrich Stracke reaffirmed GM’s plan to discuss projects with PSA Peugeot Citroen, but we await confirmation of when something definite will come out of these discussions. Furthermore, despite the alliance with PSA, Opel is open to more partnerships along the same lines. PSA has proved itself adept at establishing several alliances, for example with Fiat, Ford and BMW in various areas, so maybe this will eventually help Opel.
Producing Chevrolet models in Europe, rather than Korea, has also been talked about for some time, and would certainly be a way of improving capacity utilisation in Europe – but can German factories make relatively cheap Chevrolets more economically than Korean plants?
On the plans to expand its position as a leading manufacturer of alternative fuel vehicles, few details were given – does Opel alone have the means to lead? And Stracke called for Opel to develop a new brand strategy – but does it have the necessary time or resources? The Adam may be the harbinger of change for the Opel brand, but mass-market brands moving upmarket have had limited success in the past. Citroen has done reasonably well with its DS range, but these models are marketed under the DS name, rather than Citroen.
Turning Opel round will not be easy, and Karl-Friedrich Stracke and his team now face one of the most challenging tasks in the automotive industry.
Focusing production of the new Astra at two plants rather than three was the one element in the plan suggesting real action, with media in the UK and Germany concluding that it will be shared by Ellesmere Port and Gliwice. Ruesselsheim will retain its technical development role and may win production from other sites. It could make the next Zafira (sounding the death knell for Bochum, surely), or possibly a large PSA model (the Citroen C5 and Opel Insignia are due for replacement around the same time). Were the latter to happen, an Opel model (eg Zafira) would almost certainly have to be made by PSA in exchange.
Turning Opel round will not be easy, and Karl-Friedrich Stracke and his team now face one of the most challenging tasks in the automotive industry. The ten-point plan was met with less than total enthusiasm by the workers and union representatives at Ruesselsheim. Putting flesh on these ten bones over the next few months and implementing them will be a hard sell.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Ian Henry is a director of AutoAnalysis, an independent automotive research and consulting company based in London.
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