Vauxhall-Opel has revealed an audacious 10-year restructuring plan that, while acknowledging further tough conditions over the next few years, will have it breaking even by 'mid-decade' and moving on to 'profitable growth.' The plan, dubbed Drive! 2022, was revealed by GM Europe president Steve Girsky and vice CEO Thomas Sedran at the unveiling of the first production model of the new Adam.
Under the plan, which was approved six weeks ago by GM's main board, Vauxhall-Opel will cut fixed costs by $500m by mid-decade, launch 23 new models and 13 new engines between now and 2016 and start building non Opel-Vauxhalls (probably Buicks for China, and some Chevrolets). It will also expand and implement the recently announced alliance with PSA.
According to Girsky and Sedran, Drive! 2022 demonstrates GM's long-term commitment to Opel-Vauxhall, which it once sought to sell but decided to retain at the last minute. Opel-Vauxhall is also viewed as a microcosm of GM's global problems with costs, model range and management. Fix this, and you will know how to fix the rest.
The restructuring plan, which its authors freely admit is the latest of many, is the first “not to include hope as part of the strategy" said Girsky. A three-phase programme will “cut the cash flow gap” between expenditure and income, followed by new cars, powertrains and technologies to break even around 2016. New commercial vehicles, improving Russian sales and achieving a planned 90 per cent plant utilisation will complete the process.
According to Girsky, some of the ground work has already been done. In 2012 Opel-Vauxhall launched six new models, sold more than a million cars as Europe's third biggest brand, slashed stocks of unsold cars, and re-configured Astra production in two plants (from three). It also faced up to the tough decision of closing the Bochum plant from 2016.
Girsky and Sedran had warm words for Vauxhall, which they cited as the fastest-growing retail brand in 2012, the leader in sales of commercials and the number one seller to police fleets. “Vauxhall is an example of best practice,” said Girsky, acknowledging particular difficulty with the German market. “It shows how we can get the job done.”