Sale of Opel to PSA now shrouds Commodore future with mystery
General Motors’ shock decision to off-load its entire European operation on the French continues to reverberate through Holden.
Suddenly the future of the Opel sourced candidate that is to become the next Commodore, is in doubt.
And, with the launch fast approaching, its normally vocal PR machine is not saying much – it suggests they don’t know much either.
Holden is doing its best to put on a brave face, but the fact remains challenging times lie ahead for the company and will for some time.
Its market share and sales are at historic lows, it’s lost large amounts of cash in recent years and it is getting ready to close its iconic manufacturing facilities – with the huge job losses that surely entails.
And now comes the news its future passenger car line-up will no longer be owned by GM but controlled by the PSA Group that produces Peugeot and Citroen.
Both of these brands have struggled for years to make any sort of real impact in Australia.
Holden’s media releases stresses they are “not affected” by the changes, but like it or not they are affected and on two fronts — product and people.
As to product Holden is now faced with having to influence and negotiate with two large global organisations – GM and PSA.
They have different cultures, are headquartered on opposites of the planet and have very different future plans for sourcing future models.
GM is focused on the USA and China.
PSA is all about Europe.
Holden will need to make its voice heard loud and clear if it is to ensure it gets all of the resources needed to have right cars to sell to Australian consumers.
Then there’s the people issue.
The brutal reality is that 75 per cent of mergers and acquisitions fail to achieve their original objectives.
Leadership will be the key and the acid will be on PSA’s leaders to integrate the ex-GM businesses smoothly.
Rare are the people who can do this well.
Many of GM’s up and coming young execs, now in key positions with Vauxhall and Opel, will feel their careers have been cut short.
Having been through a few mergers and takeovers myself, I know one thing: talented people always have choices.
They will have to pay these people very well to retain them, that’s if PSA is smart enough and that’s open to question?
Otherwise, if they do not like what they see, nor the culture of the new company – they may walk.
How to retain, motivate and reward key European staff involved with the 2018 Commodore will be the most important issue facing Holden.
It will need to ensure these key European talents stay with the new company for at least the next couple of years.
The worst thing that could happen is that talented staff, seeing no future for themselves in PSA, quickly exit the new company, leaving PSA and Holden scrambling for replacements so close to Commodore’s launch.
Right now I’m sure all the major executive search firms are eyeing off the management group and key players in Opel and Vauxhall, and starting to compile their head hunting lists.
Make no mistake; some managers will already have received a phone call asking if they’d consider leaving.
This is also all about GM making a call on China, BREXIT, the emissions challenges faced in Europe, while at the same time getting on President Trump’s good side.
Firstly, GM is betting on growth and profits in China, rather than Europe – where it feels it can make some real money.
At the same time Britain’s exit from the European Union brings with it so many business uncertainties, that GM has thrown up it hands – declaring it’s not for us anymore.
BREXIT and emissions technology go hand in hand.
CEO Mary Barra said, “Only 20 percent of the (European) portfolio overlapped with rest of GM’s portfolio.”
That is why GM has concluded it cannot achieve significant economies of scale in emissions technology for Europe.
In summary, Europe is getting all too hard while massive growth and profits beckon in China.
Barra is also on one of Trump’s advisory boards and the divestiture of its European interests can easily be spun as a way to “bring jobs back to the USA”.
The bottom line is that GM’s Board has emphatically decided to cut its European losses, focus on China and the USA and secure their future financial situation by shrinking management, production and resourcing footprints.
Get used to hearing that less is more.
We can expect some great magazine articles and books in the next 12-18 months revealing the inside goings on in both companies.