PSA’s Tavares: Vauxhall Needs “New Direction” to Survive

Opel Group’s Vauxhall operations in the U.K. aren’t likely to survive long term without a “new direction” that makes the business profitable, warns PSA Group CEO Carlos Tavares. PSA hopes next month to acquire the unit from General Motors Co.

Tavares has pledged to honor existing labor agreements and production plans covering Vauxhall’s assembly plants in Ellesmere Port and Luton, England. But he says “performance is paramount for the longevity of the company in a very challenging environment.”

GM has lost about $20 billion (€19 billion) on its Opel operations, which include three assembly plants in Germany, since 1999.

Last week Tavares warned that Opel is “not going to last forever” without taking steps to become profitable. Reuters says PSA aims to reduce the unit’s annual costs by as much as €2 billion ($2.1 billion). Analysts say the company under PSA ownership is certain to eliminate jobs and close at least one of factory.