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Opel takeover through the lens of a car expert

With PSA's takeover of Opel/Vauxhall, new questions have arisen about the future role of GM's former European division. German car industry expert Ferdinand Dudenhöffer looks beyond the day's official statements.

DW: Can PSA's takeover of Opel become a success story?

Ferdinand Dudenhöffer: Let's not forget that Opel cars have been sold at loss-making prices. So, a lot of improvements are required, and General Motors didn't want to push for this any longer. The PSA chief has said he will speed up the restructuring process at Opel. In my view, this means that a lot of adjustments have to be made concerning jobs. I wouldn't rule out factory closures in the long run either. There's a tough road ahead, given Tavares' objective of logging a 6-percent profit margin by 2026.

But we hear there are job guarantees in place, meaning it will take years after any deep changes can be followed through …

There are job guarantees until the end of 2018, and the Eisenach Opel plant cannot be closed before 2020. But strategically, that's not a long period of time. I don't think the guarantees given are worth much.

What will PSA's strategy for Opel's future look like?

Just look at what's happened at PSA where large-scale restructuring measures have been carried out since 2011. Last year too the workforce was reduced, now totaling about 88,000 in the automotive business, down from 120,000 not long ago. So, the idea has been to produce the same amount of cars with fewer employees with a view to enhancing profitability. I don't think that it will be any different with Opel under PSA. Costs have to be reduced dramatically to finally end up in the black.

What about conquering new markets, China for instance?

Well, PSA has been active in China for quite while. It has made a fresh, but failed attempt to increase its market share there in 2012. Apart from that, PSA has played a small role in northern Africa and South America, but that's about it, with roughly 60 percent of its business focused on Europe. And with Opel joining the group, that figure will rise to 70 percent. This means a lot of risks as Europe is not as stable as we would like it to be, think of Brexit, Greek financial woes and what have you.

CAR chief Ferdinand Dudenhöffer (picture alliance/dpa/B. Thissen)

CAR chief Ferdinand Dudenhöffer

PSA will have to break this dependence on the European market and invest in other regions of the world.

With so many uncertainties around, what in your opinion was it that made PSA go after Opel?

The PSA chief knows that his group currently produces two and a half million vehicles annually, and that's not enough to be a big player in the long run. With Opel, the annual output will rise to 3 million units. If at the same time costs go down, PSA will earn more money in Europe - money it urgently needs for strategic investments elsewhere at a later stage.

Ferdinand Dudenhöffer heads up the CAR automotive research institute at the University of Duisburg-Essen in Germany. The interview was conducted by Klaus Ulrich.

 

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