Opel strategy update: market expansion beyond Europe, with EVs playing a role
9 March 2017
In the latest instalment of the ongoing Opel saga, PSA Group CEO Carlos Tavares is turning to export markets beyond Europe to help return the beleaguered operation to profit. This is despite the agreement in the acquisition of the Opel/Vauxhall division of General Motors (GM) by the PSA Group that Opel cannot sell cars to key global markets where GM operates such as the US, China and South America. Not while GM still retains the intellectual property (IP) rights that is.
‘There is room to export if we’re competitive’ Tavares said in an interview to the Financial Times. Tavares highlighted that the plan is to deploy Opel in new markets where the Peugeot and Citroën brands have traditionally struggled to penetrate. Currently the market options are rather limited but once Opel rolls out models for which PSA owns the IP rights, the restrictions no longer apply.
The IP rights issue is of course critical for Opel’s aspirations as far as electric vehicles (EV) are concerned. EVs still feature heavily in the planned expansion of Opel into new markets. However, the Ampera-e is expected to become quickly outdated due to the rapid development of EV technology and so there is great impetus for PSA-Opel to roll out a suite of new models on a dedicated EV platform, similar to Volkswagen’s MEB platform. This is likely to be a high priority for the new group.
There are still technical issues to overcome to meet local consumer demands though. These are essential to tap into emerging markets as demand growth is expected to slow in Europe, the US and even China. As for the US market, Tavares commented: ‘I did not buy Opel to go to the US. We need to recognise that the US market is very demanding.’
The market expansion strategy is pivotal in achieving the goal of reducing excess capacity across the newly combined production network of PSA-Opel, with the UK plants of Ellesmere Port and Luton feeling especially threatened. The merger also means PSA-Opel is now the leading manufacturer in Spain in terms of both sales and production according to the Spanish daily newspaper, El Mundo, with 886,000 vehicles produced in 2016 and combined PSA-Opel sales of 295,000 units.
This strategy update will undoubtedly be well-received by concerned unions and factory workers. But Tavares has stopped short of providing any assurances about what happens when current job guarantees run out, mostly around 2020.