June 12, 2017 / 6:00 PM / a month ago

Opel CEO Neumann quits as PSA deal nears, may rejoin VW

4 Min Read

BERLIN (Reuters) - General Motors' European division Opel is losing its top executive just as it prepares to be acquired by France's PSA Group, a move that could see the former Volkswagen manager rejoin the German behemoth.

Karl-Thomas Neumann, 56, who has restored Opel's image and reputation since taking the helm in March 2013, on Monday resigned from his post, making way for finance chief Michael Lohscheller to become the next CEO of the 155-year-old carmaker.

German-based Opel will be pressed by its new owners PSA to draw up a plan to return to profit once the acquisition, agreed in March valuing the GM division at 2.2 billion euros ($2.46 billion), closes later this year.

"Under Neumann's leadership we have made enormous progress in turning around Opel," GM President Dan Ammann said. The U.S. parent's European business also includes British brand Vauxhall.

VW is looking at rehiring Neumann, possibly to lead its Audi luxury division, where chief executive Rupert Stadler has come under fire for his handling of the emissions scandal, a source told Reuters on Sunday.

A growing expansion by VW group into electric cars and digital services as part of a post-dieselgate strategic shift could be another reason to join for Neumann, a trained electronic engineer, analysts said.

"The prospects are good that he will move to Volkswagen," said Bankhaus Metzler analyst Juergen Pieper. "He's one of Germany's most distinguished car managers and VW is in great need for excellent people."

Lasting Profit

PSA wants Opel to return to lasting profit no later than by 2020 with operating margin goals of 2 percent that year and even around 6 percent by 2026 - a target never achieved under Neumann whose push for profitability was hampered by a weak Russian market and effects of Britain's Brexit decision.

"We will vigorously proceed along the agreed path and gain more clout as part of the PSA group," Lohscheller said.

Germany's Frankfurter Allgemeine Sonntagszeitung reported on Saturday that while Neumann views the sale to PSA as the right strategic step, he is concerned that the new owner is underestimating the growing importance of electric cars.

"These comments are interesting given we have previously noted our concerns around PSA's lack of investment in key future trends," said London-based Evercore ISI analyst Arndt Ellinghorst.

PSA only came eighth in a top-ten ranking compiled by Evercore of carmakers based on average R&D spending between 2014-2016, lagging rivals such as Ford, Renault and leader Volkswagen where Neumann was formerly in charge of group-wide electronics research.

Neumann said on Twitter he will stay as member of Opel's management board until the closing of the acquisition by PSA.

When he lost his post as head of VW's vast operations in China in 2012, sources at the carmaker said at the time he was too aspiring for the then-CEO Martin Winterkorn.

"VW boss (Matthias) Mueller has a more open leadership style that is not authoritarian," Pieper said. "That would facilitate Neumann's return."

($1 = 0.8928 euros)

Reporting by Andreas Cremer. Additional reporting by Ilona Wissenbach.; Editing by Ludwig Burger, Keith Weir and David Evans

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