GM’s legacy

Opel still floundering under PSA control

DISTORTED 83448909 Opel for distortion dpa M
Paris, we’ve got a problem. Source: DPA [M]

More than a year after PSA, the French maker of Peugeot and Citroën, took over control from GM, Opel seems to be floundering as much as ever. The German company, founded in 1862 as a sewing machine maker, did report a half-year operating profit of €502 million ($588 million) in July, the first after two decades of losses, but its troubles are far from over.

The French owners, as is their wont, have centralized decision-making in Paris, causing friction with staff in Germany. The cowboy mentality that prevailed in the GM era has given way to the French taste for intrigue and strict respect for the pecking order. “It’s a real culture shock,” says one top manager.

PSA chief executive Carlos Tavares has the final word on everything. The Portugal native is a big believer in natural selection, calling on his workers to be “Darwinist” if they want to survive. “Lohscheller is just a puppet,” says one insider, referring to Opel CEO Michael Lohscheller.

Top managers are heading for the exit. Sales and marketing chief Peter Küspert left in July. Two months later, Elvira Tölkes, director of the Eisenach factory, jumped ship to Audi. The most recent departures were two longtime managers — Olaf Kaden, chief engineer in the development center, and Stefan Heil, director of risk management. “There is an exodus in all departments,” company sources say, as Paris intervenes massively in management. Opel is already cutting 3,700 of 18,000 jobs at its German operations.

G S16 Opel

At Opel’s research and development center, which employs 7,000 people in the town of Rüsselsheim near Frankfurt, the mood is dejected. In 2016, GM used half of the center’s capacities, but that number has gone down to 20 percent as the US carmaker prematurely terminated some contracts. GM, which bought Opel in 1929 and sold it to PSA in August 2017, remains a customer of the center but will virtually halt all development there in 2020, creating even more overcapacities. “The hallways are empty,” commented one forlorn worker. “There’s less laughter than before.”

PSA is seeking to mitigate the impact on ITEZ, as the development center is known, by giving it some important tasks as it divvies up development among 15 specialized centers. Opel will be responsible for development of light trucks, research into fuel cell technology and management of four-cylinder gasoline engines.

In addition, some 2,000 of the 7,000 employees at ITEZ will be transferred to Segula, a development services firm outside Paris. That transition could take as much as a year and even so, the Segula alliance will only account for 20 percent of ITEZ’s capacity.

An even bigger problem may lie in Opel’s car sales. Revenue and vehicle sales have risen since PSA bought Opel last year, but Opel’s market share in Europe slipped to 5.7 percent of new car registrations in the first half year from 6.2 percent a year ago. That level is buoyed by high rebates and car registrations on Opel’s own books, said Ferdinand Düdenhoffer, director of the Center for Automotive Research. “If the erosion of market share can’t be stopped, it will get really difficult,” Mr. Düdenhoffer said.

Opel CEO Michael Lohscheller has been talking of a “New Germanness” in the brand, but employees are questioning what the difference is between a Peugeot 3008 SUV and Opel’s Grandland X. “Nobody knows what Opel stands for,” said a manager. PSA boss Tavares may have to bring in even more French leadership to solve this puzzle.

Franz Hubik and Stefan Menzel cover industry for Handelsblatt. Darrell Delamaide adapted this article into English. To contact the authors: hubik@handelsblatt.com and menzel@handelsblatt.com

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!