Opel Targets Profitability by 2020

   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 [e-mail]; @mxbernhard

(END) Dow Jones Newswires

November 09, 2017 02:36 ET (07:36 GMT)

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