PSA Warns of Looming Cost Cuts for Opel Unit

PSA Group CEO Carlos Tavares says production costs at the carmaker’s just-acquired Opel unit in Germany are at least 50% higher than those of PSA’s operations in France.

He grouses to Die Welt that Opel factories consume too much energy and are grossly inefficient compared with PSA’s domestic plants. “Things are out of proportion at Opel,” he says, declaring that the unit must “become more efficient, everywhere, and in all functions.”

Tavares’ increasingly blunt assessment strongly suggests that he is preparing to unleash an Opel consolidation plan that will cut jobs and close plants in Germany. PSA previously indicated it will use its own platforms to carry future Opel models and won’t fund Opel’s own product program any further unless he is convinced that each project will be profitable.

Tavares says the Opel strategy he inherited when PSA bought Opel from General Motors Co. in July “simply did not work.” Now, he tells Die Welt, the unit is in danger of failing to meet emission standards that take effect in 2020. “This is extremely serious and extremely dangerous for the company,” he warns.