Vauxhall and Opel has delivered profits for its new owner PSA Peugeot Citroen, the first time there’s been a profit at Vauxhall/Opel for nearly 20 years.
When PSA – owners of Peugeot, Citroen and DS – bought Vauxhall Opel from GM, they were taking on a business which hadn’t turned a profit since 1999. But, somehow, they’ve managed to turn that round to deliver operating profits of £450 million in the first half of 2018. Which is mighty impressive, especially when you consider the second half loss last year was around £160 million
Clearly new models, like the Grandland X and Insignia Grand Sport, have played a part in the revival, but there has also clearly been more to the turnaround than that.
Part of the equation is a big drop in fixed costs (28 per cent) on stuff like marketing, big progress on a production cost saving of £600 per car, reduced working capital from reduced stock of cars and parts, and purchase accounting slashing asset values and therefore depreciation cost.
PSA are heading down the route of reducing costs further – like offloading R&D facilities – and no doubt a move to shared platforms across all of the PSA companies will help too.
But a combination of some accounting smoke and mirrors, cost-cutting and new models does seem to have made Vauxhall Opel suddenly viable.