Part 2 of the interview with Michael Lohscheller, who has been at the helm of the traditional Opel brand for almost four years.
Mr. Lohscheller, when Corona started and also in connection with the large Tesla factory in Grünheide it was said that the German auto industry was being demonstrated by Elon Musk, that it was on the ground. Now it looks like the German auto industry is making a comeback. BMW, Daimler and VW appear stronger than ever before, making huge profits. Opel is falling a step away.
I see that quite differently. Last year we made half a billion operating profit, that’s more than a four percent margin. We are still mainly in Europe. So we did very well there. In 2019 we already made over a billion operating profit, over six percent margin. That was the best result in Opel’s almost 160-year history. And we should always compare apples with apples. So if you name German multi-brand corporations, then of course we have to use Stellantis for comparison. We see that we are on the right track. And I think this was also shown by this year of crisis, in which we did extremely well. More than half a billion profit in such a difficult year is a word.
If you take a closer look at the balance sheets of VW, Daimler and BMW, you can see that a large part of the profit comes from China. And Opel cannot yet contribute this part. In the 14-brand realm of Stellantis, however, you now have the opportunity to occupy markets in which you want to enter. What about Opel in China?
In the past, Opel could only work as a regional brand in Europe. Of course that hindered us, and we weren’t at all happy about it. After all, German brands were and are export world champions. One of Groupe PSA’s first decisions was that Opel could do business all over the world. They say you have to earn money, do it, like to use our infrastructure sensibly. Now we’re going to many, even smaller, markets, but we’re doing it very quickly and we’re making good progress. We increased our volume outside of Europe by 50 percent in 2020. We’re back in Russia, in South America, in North Africa, we’re going back to Japan. All of this is not yet a huge volume, but smaller volumes also add up to a great deal. So, this internationalization from Opel to a global brand is extremely important.
Also in China? That’s where the music plays for car manufacturers.
China is, so to speak, “the elephant in the room”. Because China is the largest automobile market in the world. Opel wants to go there too. Now we have to look, can we find a way? With which brand strategy? Which price positioning? And we are now doing this very specifically in connection with the new Stellantis strategy for China. No decision has been made yet, but as Opel CEO I would of course wish that we could find a way for Opel to go to China. Because it’s true: German brands are popular in China. We would of course come a little later. That said, it’s not trivial, but we’ll look at it very concretely.
That means that you do not have the freedom to go to the markets that you want. You have just said that Opel’s entry into China depends to a large extent on the Stellantis strategy there.
No, what I mean by that is, of course, that must also make sense and be economically good. There is no one who says you are not allowed to go to China. This is different from before. We would not have been allowed to do this in the past. Now it is said, of course you can go to China, but you have to find a way that it is also sensible and profitable.
Opel is the only brand with German roots in the new Stellantis Group. What actually was, what is and what must always remain typically German at Opel?
A whole lot. Many doubters say, man, Stellantis is a difficult story and Opel is going under. Just like after the takeover by Groupe PSA. I always say the opposite is the case. Because we have French brands, we have Italian and American brands. So, and Opel is right in the middle of it all. With all the typical German characteristics. This of course includes German quality and precision. German engineering. And, what is very important for us, that we make innovations accessible to the masses.
Keyword electromobility. You can now get a Corsa – including support – for around 20,000 euros. So it is by no means a 50,000 euro vehicle like so many new electric vehicles. We always stand for democratizing innovation and making German high-tech workmanship accessible to everyone, so to speak. That works extremely well internationally. And we also notice that this positioning of Opel as the only German brand in the group is perfect.
There are also other opinions on this. For example, the fact that the only German brand can go under very quickly in this conglomerate of Americans, French and Italians.
Yes, but only if we are not competitive now or we don’t do our homework. Of course there is an internal competition. Which projects are coming to the German plants? In the development center? What about the utilization and so on. We are happy to face this internal competition, because it was the same with Groupe PSA. Many did not think that it would be so good in this constellation. We have now positioned our German plants very well for the future with large investments. I see Stellantis very positively.
You are sometimes portrayed as the one who has to ruin the brand. Are you something of a handler?
It is relatively easy to run a brand at a loss. Various management and consulting teams had tried to shoot Opel for 20 years. And one thing has made it, namely the current team. First of all, that is a very important success. We are the world champions in efficiency. Of course we have drastically reduced our costs, as well as the complexity. But not only: We have also significantly increased price penetration in the market, our customers are buying larger, better-equipped Opels again. We have a significantly improved carbon footprint. Our defensive is in place. We are now at a point where the point is to be on the offensive. Our cars are very well received. The Corsa is the best-selling small car vehicle in Germany. The new Mocha has been on the market since March, the new Astra celebrates its premiere this year. We’re talking about fuel cells, we’re talking about electromobility. It is now a matter of Opel getting profitable growth.
The Corsa is undisputedly a model for success. But it is also undisputedly a small car. And small cars are considered to have low margins. What can Opel do to tap higher-margin segments? Above small cars.
I would like to contradict the statement that the Corsa has low margins. Our results show that. In the year that we launched the Corsa, our results developed very well. So the Corsa cannot be as low-margin as it is perhaps generally assumed. Now the mocha is ramping up. Then comes the Astra. We will renew the entire portfolio step by step. The faster we get to grips with the corporate architecture, the more profitable we become.
The Manta is perhaps the most emotional Opel of all time. You recently presented a study that is completely reminiscent of the cult car. Is the Manta coming back as a production model?
At the moment I’m still totally flabbergasted because we only showed a few first pictures of this car. Not the whole car. Yes, Germany seems to be waiting for the manta. In my wildest dreams, I didn’t expect the feedback to be so overwhelming. We’ll be introducing the car to you soon. We’ll definitely play this through in market research. And then we will answer the question: New Manta, yes or no?
An Opel that triggers such emotions must surely appeal to you.
Absolutely. Back to the Future. We would have to take the positive Manta image with us, but then of course translate it into the future. In the context of electromobility that would of course be great.
Mr. Lohscheller, you keep emphasizing that Opel has not yet achieved its workforce reduction targets. Where do you stand here, and how should the workforce continue to be reduced?
First of all, I would like to emphasize that our industry is undergoing a dramatic transformation. You also need very open and honest communication. In January 2020, i.e. before Corona, we agreed with the works council that we wanted to cut up to 2,100 jobs on a voluntary basis. Then we noticed that we weren’t making that good progress. It is also clear with Corona and many employees in the home office or on short-time work. That’s why we said last year that we can’t just let it go, we have to end it now. We are on the way there.
How many people are still on short-time work at Opel?
We still have short-time working in various areas. Especially in the Rüsselsheim plant. We’ll start with the DS4 and the Astra in the second half of the year, then we’ll get out of there. In other words, short-time working will continue to run in some areas until the end of the year, but then we’ll basically be through with it.
As an ex-VW manager, you know the Wolfsburg-based group with its twelve brands. What is different at Stellantis with the 14 brands?
Stellantis is still relatively young. My first impression is that it is an enormously international group. I’ve never seen it like this in my career. One or the other of Opel’s competitors is either very German or very American or very Japanese. At Stellantis we already have a “multicultural at its best”. I find that very, very exciting. Stellantis really is an absolutely global company. I have not yet got to know that in the form. And I rate that as very positive.
Do you believe that the German auto industry will keep its prominent position as the most important branch. Will she be able to keep the many attackers from China, including Tesla from the USA, at bay?
Yes, that is my perception and remains my assessment. We may not always be the fastest in Germany when it comes to innovation. But when we tackle something, we do things right. Take the subject of battery cells. When we said we were going to make a factory for battery cells, we often said: Let the Asian suppliers do it. And now take a look at how many battery cell plants have now been announced in Germany. I think we will come back with all our might. Sure, the mobility industry is extremely competitive. But German industry will come back. And I hope stronger than before. There is still a lot of homework to do when it comes to digitization. But the subject of battery cells in particular is a nice one: We were at the very back and will probably soon be at the front.
Would a green federal government be more likely to help the auto industry come back or to stand in the way of doing so?
We made the big investment decisions. That is, we see very clearly how we need to change. And I think the political framework is now relatively clear, and a lot is also coming from Europe. We have fully initiated the transformation.
Does that mean a green federal government can’t scare you? The auto industry is not exactly known for the number of green voters working there.
Personally, I have absolutely no fear of contact. But you always have to keep the balance between the ecological and the economic side.
Have you ever chosen green?
Thank you for talking to us, Mr. Lohscheller.