Home Brandwatch Peugeot stops Opel SUV project to reduce costs

Peugeot stops Opel SUV project to reduce costs

Peugeot stops Opel SUV project to reduce costs

The £1.9bn takeover of the two GM Europe brands — Vauxhall and Opel – by France-based Peugeot-Citroen Automobile Group [PSA] has been completed. General Motors sold off its loss-making European operations to PSA Group — the owner of the Peugeot, DS and Citroen brands.

“We are witnessing the birth of a true European champion,” PSA chairman Carlos Tavares said. “We will assist Opel and Vauxhall’s return to profitability and aim to set new industry benchmarks together.” 

And action to that effect has already begun.  A 100-day business plan is in preparation and it seems there will be some adjustments in the production of new models. Among models in the hit list [we hope this is temporary] is the much touted and prestigious ‘Insignia/Monza’ SUV project, at least for now. The Opel SUV, if made would have been the range-topper for the brands, was set to be built on the Insignia’s platform and would have rivalled other big SUVs such as the Ford Edge with dramatic styling and a befitting interior.

In terms of synergies between the new partners, it is expected that PSA will help Opel build the new Corsa on the same underpinnings as the Peugeot 208 and Citroen C3 models.

Opel’s business goal is to generate a positive operational free cash flow by 2020 as well as an operating margin of 2 per cent by 2020 and 6 percent by 2026. Under the new owners, day to day running of operations remains unchanged mostly. With the new deal, PSA is moving closer to attaining a goal of achieving economies of scale through building more than 5 million vehicles. PSA has a better track record of profitability in the business of manufacturing small cars in Europe.

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