PSA Group CEO Carlos Tavares vowed to return the loss-producing Opel and Vauxhall brands to profitability in the near future. After nearly two decades of losses, Opel turned a profit this year.
Bloomberg reported Tuesday that Opel booked a nearly $600 million profit for the first six months of 2018. The profit comes as PSA aggressively restructures Opel’s operations and cuts 3,700 jobs from the German workforce. PSA has also worked to increase synergies between Opel, Vauxhall, Citroen and Peugeot to slash development costs for new cars. Tavares has gone as far as taking printers out of offices and axing company phones.
So far, it’s working, and the mass-market carmaker has lifted its profit margin closer to premium German car brands.
“This is simply the quickest turnaround I have seen in the auto industry in many years,” JP Morgan analyst Jose Asumendi, said.
Tavares cautioned not to celebrate too early and called the first profit an early sign of bigger things to come from Opel and Vauxhall. The automaker’s initial plans called for Opel to return to profitability by 2020 with a 2 percent operating margin, which has been achieved this year—all before platform and powertrain synergies create another $1 million-plus in savings. The Corsa will be the first Opel to be fully developed under the French automaker, and Tavares said costs have dropped between 20 and 50 percent during the development phase.
Recurring operating profit for PSA jumped 48 percent during the first half of 2018 to $3.5 billion.
The PSA CEO said work will continue to make Opel leaner and more profitable in the years to come, something General Motors never achieved. And one day, a PSA brand will make its way to North America—perhaps Opel.