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Autos bosses focus on technology, play down PSA-Opel impact

Some auto industry executives gathering at the Geneva auto show said the PSA-Opel deal was unlikely to change the industry landscape on its own

Image Credit: AFP
(From left) CEO of PSA Carlos Tavares, CEO of Opel group Karl-Thomas Neumann and General Motors President Dan Ammann in front of the new Opel Crossland X, during the auto show.
Gulf News

GENEVA

The auto industry is facing seismic changes with the rise of electric vehicles, automated driving and car sharing, and adapting to these will eclipse even big mergers such as PSA’s purchase of Opel, executives at the Geneva auto show said.

Peugeot maker PSA Group on Monday agreed to buy loss-making Opel from General Motors, creating Europe’s second-biggest carmaker behind Volkswagen and sparking speculation of more consolidation.

However, some executives gathering in Geneva said the deal was unlikely to change the industry landscape on its own, with new competitors in Silicon Valley and China and changing consumer habits set to have a much bigger impact.

“We are really in a transitionary phase for the industry.

There are new competitors on the horizon like Tesla or Chinese ventures,” Herbert Diess, the head of Volkswagen’s (VW) main passenger car division, told reporters.

“My feeling is that the industry as a whole and brand positioning will change in the next 10 or 15 years and that comes in addition to traditional consolidation in the industry,” he said, adding he did not expect a wave of Opel-style deals.

Volkswagen (VW) is investing billions of euros in electric vehicles, automated driving and new mobility services, in part as it tries to recover from an emissions test cheating scandal on diesel engines which has hit demand for diesel vehicles.

The company is unveiling a fully self-driving concept car at the Geneva show.

Karl Schlicht, head of European sales at Japan’s Toyota Motor Corp, also played down the impact of the PSA-Opel deal, which brings together two carmakers with heavy focuses on diesel and low-margin fleet vehicles, respectively.

“We ran a counter strategy in Europe which may not look as successful for some past years because our volumes were a bit lower, but in terms of where we want to end up, it’s turning out to be a good strategy,” he said, referring to Toyota’s investments in hybrid vehicles.

The company forecasts its European sales will rise 5 per cent this year, compared with an industry expected to grow 1 per cent.

Some industry analysts also say an enlarged PSA could actually ease the pressure on rivals if CEO Carlos Tavares uses similar methods to turn around Opel that worked at PSA.

Exane’s Dominic O’Brien, for example, sees Opel “adopting more disciplined pricing strategies akin to PSA’s current model.” In the three years since Tavares took the helm at PSA, its three existing brands — Peugeot, Citroen and DS — have significantly increased pricing relative to benchmarked peers, sometimes at the expense of sales.

A similar approach at Opel, which has been among the region’s most aggressive discounters, could give the entire European mass-market car industry some breathing space.

Stefan Bratzel of the Center of Automotive Management in Bergisch Gladbach, Germany, said it was the potential improvement in profitability at PSA-Opel that posed a bigger challenge to rivals than its sheer size.

“There is no survival of the fattest,” he said. “Just because you’re big, you do not win the game.”

 

BOX — Vauxhall boss says UK production key to the car brand

GENEVA: The managing director of British car brand Vauxhall, which is being bought by Peugeot from General Motors, said on Tuesday the firm’s British production sites were key to the brand’s heritage and sales.

“A key part of the brand heritage is that there is UK manufacturing,” Rory Harvey told reporters at the Geneva auto show. Peugeot-maker PSA has agreed to buy GM’s European division, known as Vauxhall in Britain and Opel on the continent, prompting concerns about the future of the British brand’s car and van plants. Asked about whether the extra cost of importing more expensive euro-denominated parts had outweighed the benefits of cheaper exports since a Brexit-induced fall in the pound, Harvey said the net effect was negative.

— Reuters

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