Opel Returns Healthy Profit After 20 Years Of Losses With GM

After failing to turn a profit for two decades under the ownership of General Motors, Opel has reported a healthy 2018 profit after being acquired by PSA Group.

The German car brand and its UK sibling Vauxhall, turned a profit of 859 million euros ($979 million) in 2018. This is a remarkable turnaround considering Opel had a $204 million loss for the last five months of 2017 after PSA Group purchased the carmaker on August 1 of that year.

Not even PSA expected to turn Opel and Vauxhall into profitable brands this quickly. In fact, Opel had forecast a return to profitability by 2020, Auto News reports.

PSA is doing what GM couldn’t

In addition to its profit, Opel earned a 4.7 per cent return on sales of $20.9 billion in 2018, beating out VW which earned a 4.1 per cent return on its global sales in 2017.

In the years leading up to PSA’s purchase of Opel and Vauxhall, the two companies were on the road to recovery but even still, General Motors was eager to sell them off. In fact, it is reported that Opel would have reached its goal of breaking even in 2016 if the decision for the UK to lead the European Union hadn’t hurt business at Vauxhall.

PSA Group, led by chief executive Carlos Tavares, quickly cut 3700 manufacturing jobs across Opel’s German factories and also transferred 2000 jobs from Ruesselsheim, Germany to France when GM sold the duo. In addition, Tavares has focused on eliminating heavy discounting on Opel and Vauxhall models and has helped slash the Opel-Vauxhall inventory by 32,000 vehicles down to 195,000 vehicles as of December 31, 2018.