Opel cancels contracts with suppliers

The embattled German car maker Opel announced on Tuesday the cancellation of all of its existing contracts with intermediate part suppliers.

The goal of the radical measure was to achieve new agreements with suppliers which would improve the profitability and performance of the car maker, a spokesperson for Opel told press.

Around 1,600 contracts would be dissolved throughout Europe, 385 of which are based in Germany.

Speaking to the automotive magazine Autohaus on Tuesday, however, Juergen Keller, the head of Opel's German operations, emphasized that only 12 suppliers would not receive a new offer from the Ruesselsheim-based car maker. It would hence be inappropriate to describe the move as a permanent reduction in Opel's supplier base.

According to Keller, the negotiation of new contracts would begin imminently. The Opel executive predicted that resulting agreements would then become enforceable from early 2020 onwards.

Opel has recently been acquired by the French automotive group PSA. PSA chief executive officer Carlos Tavares has since vowed to slash costs at the loss-making German car maker by 1.1 billion euros (1.4 billion U.S. dollars) each year despite commitment not to close any existing plants or lay-off staff.

"Step by step, we will create a sustainable future for our company in Germany with measures to improve our competitiveness," a related statement released by Opel CEO Michael Lohscheller read.

Nevertheless, automotive expert Ferdinand Dudenhoeffer warned on Tuesday that the escalation of an ongoing dispute between Opel's management and labor representatives over the exact shape of corporate restructuring efforts could still witness the shuttering of several German plants.

Demands by the influential IG Metall trade union for PSA to preserve existing collective wage agreements at Opel might be used as an excuse by the new French owners to backtrack on earlier assurances to hold on to production facilities in Germany.

"In the end, we may yet see the closure of Opel plants in Kaiserslautern and Eisenach," Dudenhoeffer told press.