PSA hopes to make Opel a success in Russia after GM failed

PSA Group's Opel brand will return to Russia, a market it abandoned under former owner General Motors.

Opel models to be sold in Russia could be a mixture of imported cars and vehicles built in PSA's plant in Kaluga, south of Moscow, Opel CEO Michael Lohscheller told the German press.

Lohscheller said the brand would sell its newer models built on PSA platforms. This would exclude vehicles such as the current Astra and Mokka, which use GM platforms.

A PSA spokesman told Reuters: "Local production is one of the priorities and the main tool of a successful automotive business in Russia. Taking this into account, we are considering the possibility of expanding the model range in Kaluga and do not rule out assembling Opel cars there."

PSA owns a 70% stake in the Kaluga plant, which has a total capacity of 125,000 cars per year, while Mitsubishi owns the remaining 30%. In 2018, the plant produced just 38,108 Peugeot, Citroen and Mitsubishi cars.

GM pulled Opel out of Russia at the end of 2015 at the height of a crisis in the country's car market due to a sharp depreciation in the ruble.

Since then the Russian market has recovered and new-car sales are expected to rise 3.6% this year to 1.87m, according to the Association of European Businesses (AEB) lobby group.

PSA CEO Carlos Tavares said the Opel brand is still fresh in people's minds in Russia and there were half a million Opels on the road.

Russia is a significant opportunity to do what PSA is already doing in Ukraine with some success, he said on the automaker's 2018 earnings call on 26 February. PSA launched Opel in Ukraine last year.

PSA's investment in production of the Jumpy and Expert light commercial vans at the Kaluga plant is ramping up and is profitable, Tavares said. "We will continue to invest in LCVs in the Eurasia region and make a double-digit profit and triple volumes in 2021 against 2018," he said.

"The success story of Eurasia is Ukraine where we have achieved a market share of 6% but more work needs to be done in Russia both in terms of product and network capability and management," Tavares said.

PSA bought the Opel and Vauxhall brands from GM in 2017. As part of a plan to reduce its dependency on Europe, PSA will also launch its Peugeot brand in the US and its Citroen brand in India.