Opel Targets Profitability by 2020
November 09 2017 - 2:51AM
Dow Jones News
By Max Bernhard
German car maker Opel, acquired by Peugeot SA (UG.FR) in August,
plans to return to profitability by 2020 and offer electrified
versions of all its passenger vehicles by 2024, the company said
Thursday as it presented its new strategy.
The company said it plans to return to profit by 2020 and create
a "profitable business model whatever the headwinds may be." By
then, it expects to have positive operational free cash flow and an
automotive recurring operating margin of 2%, rising to 6% by
2026.
Opel said it plans to offer electrified versions of all of its
passenger vehicles--either as battery electric cars or plug-in
hybrid cars--by 2024, and make use of Peugeot technology. The
company is aiming to have four electrified cars on the market by
2020, it said.
Peugeot bought the unprofitable German car maker from General
Motors Co. (GM) earlier this year. Since then Peugeot and Opel
managers have been working on the restructuring plan, said
Opel.
To return to profitability, Opel plans to reduce its break-even
point--the number of cars sold at which it starts making a
profit--to 800,000 vehicles.
In a call with journalists, Michael Lohscheller, chief executive
officer of Opel, said the current break-even point was "absolutely
too high," but he did not provide a number.
Opel said it aims to move the company toward the industry
benchmark in terms of its labor-cost-to-revenue ratio by reducing
complexity across all departments. The company said it intends to
maintain all plants and refrain from making forced layoffs in
Europe. Instead, it plans to cut labor costs by implementing new
working-time concepts, voluntary-leave programs and
early-retirement plans. In October, Opel said it would cut up to
400 jobs at its Vauxhall Ellesmere Port plant in the U.K.
Opel said it plans to gradually switch from using GM technology
and power units to Peugeot's in its cars, and expects annual
synergies for the Peugeot group of EUR1.1 billion by 2020 and
EUR1.7 billion by 2026.
Write to Max Bernhard at Max.Bernhard@dowjones.com;
@mxbernhard
(END) Dow Jones Newswires
November 09, 2017 02:36 ET (07:36 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
General Motors (NYSE:GM)
Historical Stock Chart
From Mar 2024 to Apr 2024
General Motors (NYSE:GM)
Historical Stock Chart
From Apr 2023 to Apr 2024