Stellantis brand Opel must tackle German production costs to be competitive, says CEO

By Rachel More

RUESSELSHEIM, July 1 (Reuters) - Carmaker Opel must cut costs to be competitive, its CEO said as the German brand plots a new course within parent Stellantis, leaning on a partnership with China's Leapmotor and a new model for its Ruesselsheim factory.

Germany's strengths are in engineering quality and its location at the heart of the European market, but energy and labour costs are an issue, Chief Executive Florian Huettl told Reuters at Opel's headquarters.

"We must not stop reducing our production costs and automating our processes to remain competitive," Huettl said.

Europe's legacy carmakers are also battling increasing Chinese competition. Stellantis's tie-up with Leapmotor will serve as a test case for whether such partnerships with potential competitors can solve plant capacity issues and close the technology gap.

"We have very high hopes for this partnership," Huettl said, adding that the companies are on track for a two-year development timeline on their jointly produced electric SUV under the Opel brand.

Stellantis announced a €​60 billion ($70 billion) strategy in May, focusing the bulk of investment on Jeep, Ram, Peugeot and Fiat, while Opel serves as a regional brand. Part of that strategy is the electric SUV with Leapmotor, set to be produced alongside Opel's Corsa at its Zaragoza plant in Spain.

Stellantis also announced last month that the successor to Opel's Astra model would be manufactured in Ruesselsheim, where the group employs 6,800 workers, as part of a €1 billion investment package for Germany.

Ruesselsheim, one of Germany's oldest car plants, is currently operating one shift per day rather than two or three.

Job cuts announced in April will reduce the number of engineers at the site by 40% to 1,000.

($1 = 0.8775 euros)

(Reporting by Rachel MoreEditing by David Goodman)