Vauxhall-Opel's new owner PSA reveals job and plant-saving strategy aimed at a return to profit

Alan Tovey
Vauxhall badge  - Tony Margiocchi / Barcroft Media

Peugeot-owner PSA Groupe has laid out a job-saving strategy for the struggling Vauxhall and Opel businesses it bought from GM earlier this year.

The French company said it wants to “maintain and modernise all plants” as well as “refrain from forced redundancies”.

Michael Lohscheller, chief executive of Opel, presented the plan which is aimed at returning loss-making Vauxhall-Opel to profit by 2020.

The announcement - in an update 100 days after the £1.9bn sale by GM completed - comes just weeks PSA said it would cut up to 400 of 1,800 staff at the Vauxhall plant in Ellesmere Port where the Astra is built.

Vauxhall Astras roll off the line at the marques' Ellesmere Port plant

Mr Lohscheller said the strategy - titled “Pace!” - would “protect our employees against headwinds”. A “necessary and sustainable reduction of labour costs” will come through staff have working hours cut and early retirement schemes will be offered. No mention of plants being shut were made in the presentation.

The shake-up aims to combine PSA and Vauxhall-Opel operations to generate annual savings of €1.1bn (£970m) by 2020, rising to €1.7bn by 2026.

A three-year target of shaving €700 off the production costs of each car has been set, and other savings will come from sharing marketing and research and development.

The number of basic “platforms” that are used to build cars in the range will be cut from nine now to just two, both of which will come from PSA. Engine families will also be reduced from 10 to four. These changes will be made by 2024.

The 4 millionth Astra recently rolled off the line at Ellesmere Port Credit: PA

Such measures would mean the business would break even at 800,000 cars a year, Mr Lohscheller said.

PSA chief executive Carlos Tavares, a renowned cost-cutter, said he would leave Vauxhall and Opel executives to make the plan work.

However, when PSA, which also owns Citroen, was in negotiations about taking on the Vauxhall and Opel brands, Mr Tavares said they were "burning through €1bn of cash a year and have been making red ink for 10 years… the situation is not sustainable”. 

Greater efficiencies would lead to new model allocations at plants, Mr Lohscheller said, but he did not spell out which sites could expect to benefit.

As well as Ellesmere Port, where the Astra is scheduled to be built until 2021, Vauxhall also makes the Vivaro van at Luton. Work there is slated to continue until 2025.

The PSA, Opel and Vauxhall logos on display at the conference where the new strategy was revealed Credit: Bloomberg

However, Opel’s R&D centre in Rüsselsheim, Germany, was singled out in the plans, with it intended to become “global competence centre” for all of PSA.

“Our future will be secured and we will contribute with German excellence to the PSA development,” Mr Lohscheller said. “All new Vauxhall-Opel vehicles will be engineered in Rüsselsheim. This will further guarantee German engineering quality and affordable innovations.”  

Mr Lohscheller also said Vauxhall-Opel would become a “European CO2 leader”, will all ranges offering electric or plug-in hybrid (PHEV) options by 2024, with the Grandland X PHEV and an electric Corsa leading the way in 2020.

An electric version of the Vauxhall Corsa will be introduced under the plans

Both the Vauxhall and Astra brands look likely to be maintained and an export drive into 20 new markets using their names is also planned, along with nine new models to be launched over the next three years.

British and German unions are currently meeting to understand what the strategy means for their members.

A spokesman for Unite union added: “There are promises of investment but they key thing is to understand the nature of it - what will it look like, where will it go, what models will it affect. We just don’t know yet.”

 

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