Germany's Opel is already seeing the results of synergies with new parent PSA Group as the brand has just reported its first profit in almost two decades.
Opel (Vauxhall in the United Kingdom) on Tuesday reported sales of 550,900 units and a profit of $587 million for the first six months of 2018. Opel's profit margin has also reached 5 percent, which is approaching the level of Germany's volume premium brands.
Note, Opel's first half result for 2018 excludes $474 million in one-time charges that were occurred following the brand's sale to PSA Group last year. The charges were the result of an agreement with labor unions over voluntary reductions of Opel's workforce in Germany.
Nevertheless, the result brings to an end Opel's run of losses under the guidance of former parent General Motors, which have totalled more than $20 billion since 2000. Many of the reforms that led to Opel's profitability were implemented during GM's ownership of the brand, however. Opel even came close to reaching profitability last year but was hurt by currency fluctuations.
Carlos Tavares
But the turning point is really due to the cost-cutting strategies of PSA Group CEO Carlos Tavares and the synergies resulting from closer tires with fellow PSA Group brands Citroën, DS and Peugeot. Those synergies include manufacturing and logistics efficiency gains and access and sharing of platforms and other technologies.
The next step will be to fully swap to PSA Group platforms and expand Opel into markets outside of Europe, something GM only did on an extremely limited basis. In contrast, under PSA Group's guidance Opel will enter more than 20 new export markets by 2022. This includes plans to build Opel vehicles at a new plant in Namibia.
Finally, there will be a push to electrify the entire Opel lineup in Europe by 2024 and make Opel’s R&D center located in Rüsselsheim, Germany the global competence center for the entire PSA Group.
PSA Group in the first half of 2018 sold 2,181,800 units, making it the second biggest automaker in Europe by volume after the Volkswagen Group.
