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Opel’s board will meet on Thursday to discuss a business plan designed to insulate it against the deep downturn in Europe’s car market and root out cost savings together with General Motors’ new alliance partner PSA Peugeot Citroën.
With Europe the biggest drag on GM’s profitability and share price, the Detroit carmaker is seeking synergies with Peugeot and studying ways to build cars more efficiently in a market that analysts now say may not fully recover in this decade.
However, investors may be disappointed as two people close to GM, who requested anonymity, said it was unlikely to make public major initiatives in areas such as job cuts or plant closures on Thursday.
“The financial markets like bloodshed … but I don’t think we need to expect huge bloodshed this time round,” said Christoph Stürmer, analyst with IHS Automotive in Frankfurt.
GM earlier this month published the broad outlines of its strategy to fix Opel, including a plan to close its plant in Bochum, Germany, at end-2016 when production of the Zafira minivan runs out.
The closure threat raised the temperature among trade unions but Opel’s management offered workers the carrot of a ban on compulsory redundancies until 2016. Talks with GM’s workforce on the issue are due to continue until October.
In an effort to boost efficiency, GM plans to run Opel’s six European car plants on three shifts, keeping them busy in part by bringing some production of Chevrolet vehicles from South Korea.
Sales by Opel and its sister UK Vauxhall brand are down 16 per cent so far this year but sales of Chevrolet vehicles are up 14 per cent.
Western Europe’s car market would decline by 7 per cent this year, the consultancy AlixPartners said in a report published this week. The group forecasts that with the euro crisis fuelling the industry’s woes, light vehicle sales are unlikely to regain the peak of more than 16m units they reached in 2007 before 2020.
IHS’s Mr Stürmer said that GM’s plans for its European unit went “in the right direction – keeping it strong rather than starving it to death”.
Opel’s management was pursuing a two-pronged strategy, he said: extracting rapid cost savings with Peugeot in areas such as purchasing that did not breach its existing labour agreements, while formulating a long-term plan for the period after 2014.
GM and Peugeot, which agreed a global alliance in February in an effort to restore profitability in Europe and compete with stronger rivals such as Volkswagen, have set up working groups in areas including logistics, purchasing and engineering.
Opel’s board is expected to discuss a draft agreement that will involve Peugeot’s Gefco unit taking over Opel and Chevrolet’s logistics in Europe, including Russia and Turkey, people close to the French and US carmakers said.
The deal will then set the scene for Peugeot’s planned sale of control of Gefco to one of several private equity groups angling to buy the unit.
However, Opel on Wednesday described as “speculation” a report in Germany’s Frankfurter Allgemeine newspaper that Opel might make the Peugeot 508 and Citroen C5 limousines at its home Rüsselsheim plant and that Peugeot could make Opel’s Zafira.