Business Irish

Tuesday 25 April 2017

Peugeot planning 'engineering blitz' after Opel takeover

The Peugeot 208
The Peugeot 208

Laurence Frost

French carmaker PSA Group is planning an engineering blitz to redevelop Opel's core models with its own technology if it succeeds in buying General Motors' European arm, according to company sources and advisers.

The Peugeot maker, which is in talks with GM on an Opel deal, wants to build the next Corsa mini on the same architecture as its Peugeot 208 and Citroen C3 models, several sources said.

This presents a tough challenge as the new GM model is due for an update in two years, leaving little time for a major reworking of its design. PSA's alternative, however, would be to wait until around 2025 - the end of its next model cycle - to tap cost savings in the best-selling vehicle category.

Chief executive Carlos Tavares outlined the plan at a PSA board meeting on Wednesday, one source said. The aim would be to fuse the small car categories that PSA and GM failed to combine under a looser 2012 alliance that missed key targets.

Tavares yesterday refused to comment on the details of possible PSA-Opel vehicle programs as he presented record PSA earnings to reporters and analysts, stressing that the acquisition had yet to be agreed with GM. But he said the combined company would aim to sell more than five million vehicles annually within "a few years". PSA and GM Europe delivered 4.3 million vehicles between them last year.

"When you look at the product plan you see that you can, in a quite speedy way, implement significant synergies," Tavares said.

The next Corsa and related Mokka X mini-SUV are among a wave of small Opel cars already in development for launch in 2019. The two models represent 40pc of GM's European sales, according to LMC Automotive data.

PSA wants the Opel deal to yield cost synergies of between €1.5bn and €2bn, sources close to the talks have said.

PSA and GM have tried before to combine their small cars - the failed centrepiece of a "global strategic alliance" unveiled in 2012 and rapidly scaled back to three shared projects from 40 initially considered.

Gilles Le Borgne, the PSA engineering chief, said "it's completely different now", adding that engineering teams were ready to move fast.

"It would be stupid to miss another cycle," he said, adding that it normally takes more than three years to develop a new model.

A swift convergence of small car design and production may deepen concern over possible job losses, especially in Germany - home to about half the 38,000-strong GM Europe workforce.

The competing PSA and Opel small car and SUV line-ups are currently spread among no fewer than five European plants: Opel Eisenach, Germany, and Zaragoza, Spain; and PSA Poissy and Mulhouse, France, and Trnava, Slovakia.

Tavares has promised to honour existing GM plant and job guarantees, but many of those expire in 2018-2020 - around the time the first jointly-developed products would be arriving.

Irish Independent

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