Cruising for a bruising

9 November 2017 By Liam Proud Follow @liamwardproud

PSA Group is targeting 1.7 billion euros of savings from its purchase of Opel without sackings or plant closures. Renault and Nissan show that’s plausible. Job cuts would make the deal more lucrative and will be hard to avoid across the industry with the rise of electric cars.

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Peugeot parent PSA Group said on Nov. 9 that its technology will be used in all Opel-Vauxhall models sooner than initially planned to deliver promised savings from its acquisition of the loss-making German carmaker.

From 2024 onwards, all Opel and Vauxhall passenger car models will be based on joint group “architectures”, Opel boss Michael Lohscheller said. That is three years ahead of its original plan, Reuters reported.

PSA Group said in March it was buying the Opel and Vauxhall automotive brands from General Motors for 1.3 billion euros. An additional 900 million euros would be paid by the Paris-based carmaker and BNP Paribas for Opel’s financing arm, to be owned and operated jointly and consolidated by the French bank.

PSA is aiming for 1.7 billion euros of annual synergies by 2026 and 1.1 billion euros by 2020. It said on Nov. 9 that 80 percent of the savings will come from purchasing, research and development, capital spending, and selling, general and administrative expenses.

Twenty percent of the synergies are expected to come from manufacturing. “The plan is designed with the clear intention to maintain all plants and refrain from forced redundancies in Europe,” the group said.

PSA Group shares were down 2.4 percent to 19.66 euros at 0900 GMT on Nov. 9.

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PSA Group shares were down 2.4 percent to 19.66 euros at 0900 GMT on Nov. 9.

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