Poll: What Should GM Do With Opel-Vauxhall?
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Given the continuous financial issues stemming from GM’s European operations (namely, Opel), we simply couldn’t go without initiating this poll:
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There’s no need to Pontiac Opel yet. they gave Saturn 20 years without a profit. They could build Cadillacs for Europe in Germany the high labor costs won’t hurt so much. They like to tax in Europe maybe the German government could increase taxes on cars imported from Korea. That would make it more cost-effective To build Chevys there.
Sorry, but no one in Germany or the rest of Europe would buy a Cadillac!
American cars have a very bad reputation in Europe!
The problem is that Opel has to stay in Europe while GM sells cars from Opel as Chevrolet in Latin America and as Buick in China. The Buick Excelle (alias Opel Astra, develpped in Rüsselsheim, Germany) is market leader in China with more than 300000 sold units las year. Hole Opel sold only 5000 models in China in 2011 because tey aren’t allowed to sell their actual models or to produce in Asia because GM doesn’t want to canibalize their ‘American’ products Chevrolet and Buick. Ironically Chevrolet pushes with Opel-technic in Europe for a cheaper prize… That’s the reality why Opel has such problems…
PS: Sorry for my bad English, but this had to be said!
American cars have a bad reputation right now. This will change with much, much better product — as it speaks for itself.
As for Buick in China and elsewhere — Opel’s current involvement is very limited. Some facts:
1. The Opel Excelle that you refer to selling more than 300,000 units a year is NOT an Opel Astra, but a rebadge of a legacy Daewoo model. See here:
http://gmauthority.com/blog/2012/02/what-is-this-buick-that-sells-20000-units-a-month-in-china/
The Excelle GT/Verano and XT, or the Astra Sedan and Hatchback, sell in much lower volumes.
The reason the Excelle sells so well is because it’s so cheap.
2. The only other Opel-designed vehicle in the Buick lineup is the Regal (Insignia) — and that itself doesn’t sell in nearly as large volumes as it does in Europe. Neither will the Encore (Mokka).
3. GM is no longer selling Opels and Chevrolets in South America. This was a temporary measure to use legacy Opel models to fill lineup gaps (like the two generations-old Meriva, Zafira, and Astra). Today, developing markets are getting their own unique vehicles (Chevy Spin, Sail, Cobalt, Agile, Tornado/Sonoma/Montana).
http://gmauthority.com/blog/2012/06/this-is-the-new-chevrolet-spin/
Opel is no longer part of the equation in South America — but is entering international markets directly itself:
http://gmauthority.com/blog/2012/06/opel-plans-for-international-expansion/
4. Opel itself is entering China and other markets worldwide, except for North America:
http://gmauthority.com/blog/2011/09/opel-is-coming-to-china-end-of-story/
Considering all of this, it would seem that Opel’s biggest problems include too many plans that are not being utilized to capacity (or cost-effectively), thereby resulting in major unnecessary expenses.
If they cancel Top Gear UK, American cars will quickly regain the respect they deserve.
What’s the difference between sell it And dump it? Maybe replace dump it with wind it down?
Great suggestion, Danny. Wind it down is what it should have read.
How about another option; “I just don’t know?”
GM would pick that option…
You can believe me, this will not change in Western Europe even with better products. If a European has the choice between a Caddy on the one side and another premium car like Mercedes, BMW and Audi on the other side they won’t take the Cadillac just because of the image and prestige.
OK, my mistake concerning the difference between Excelle and Excelle GT, but also the Excelle GT/XT sells very good in China.
Look here:
http://focus2move.com/item/152-china-car-market-up-29-in-first-half-2012-volkswagen-sold-1-million-cars
Yes, Opel will enter some markets like Chile, Israel, Australia and South Africa. In my opinion that’s not worldwide. These small markets can’t solve the problem even because Opel can’t produce local. In China Opel will never competitive only with exporting from Europe because of the costs.
GM still sells (old) Opels as Chevrolets in South America, especially in Brasil. Look here:
http://www.chevrolet.com.br/veiculos/todos-os-modelos.html
Here you have the Corsa, the Meriva, the Zafira, and Cruze which as least uses technic from the Astra. Perhaps this will change in the future.
Opel’s expenses are not higher than those of VW or Ford Europe or another European brand. The problem is that Opel don’t sell enough cars because of it’s limitation in Europe. You can see the same problem with FIAT, Peugeot/Citroen and Renault. All these brands sell most of their units in Europe while this market is saturated and flooded with cheaper cars from South-Corea (Hyundai, Kia and Chevrolet)
You’re talking about Opels in Brazil that 1) are 2+ generations old, 2) sell very little and 3) are about to be phased out. How is that hurting Opel today?
The Meriva and Zafira are being replaced with this:
http://gmauthority.com/blog/2012/06/this-is-the-new-chevrolet-spin/
Again, any last-gen Opels you see on sale today wearing a Chevrolet badge were part of the Old GM practices and will be going away very soon.
But back to your original point: if we were to believe that Cadillacs will never sell in Europe, even if the product became competitive, then that would be a very short-sighted approach. Remember when no one would buy a Mac from Apple? Today, Apple is the most valuable company in the world. There are countless examples of how 1) better product, 2) effective marketing, 3) exceptional customer service, and 4) a motivated team can make huge changes in a marketplace. Discounting Cadillac based on history is narrow-minded, in my opinion.
Also, I fully agree with you that Opel’s biggest problem is its geographic limitation. I, for one, would fully support the phasing out of either Opel or Buick in favor of a global Opel or Buick. But I don’t think anyone at GM would make such a move today, as the company seems to be playing it very, very safe.
How about make better vehicles? Good vehicles sell themselves
@Hunter:
Nothing sells itself. This is an old falsehood popular with salespeople attempting to push something onto a consumer. If things sold themselves, corporations and small businesses would not have to spend so much of their budgets in advertising.
Quality product does develope a reputation, however, and that credibility grows over time. Look at Audi, who literally flopped in America after putting out some dogs – In the seventies, it was common to see Audis on the side of the road dead. They rectified their issues and built better engines – but it took over a decade for them to recover. Today Audi is sitting pretty amongst it’s rivals. Same with Hyundai – Americans wouldn’t touch a Hyundai or Kia for years as they were known to be pieces of cow turd. Today, with manufacturing in the USA, and sexy products that the new generation are drawn to, Hyunda and now Hyundai-owned Kia have become a force to be reckoned with in the auto market.
This rings just as true for GM in Europe and domestically. Older folks like myself who lived through the horrible GM eighties often say, “I wouldn’t buy a crap GM product if you paid me!”. But time can heal all wounds – and a new generation grows up to car buying age. If GM pragmatically builds autos that are solid and rate well in reviews – it’s a given they’ll not only survive, but thrive.
It takes time to get over plastic dashboards that creak, and seats that break for no reason – oil leaks and rattles and squeaks. American cars must compete on quality or they will just go under – AGAIN. Look to Volt to realize America can compete, and innovate. BMW hired away Frank Weber and they’re playing catch up to Voltec technology. Germans cannot live by reputation forever. Today, Mercedes, BMW and Audi are putting out the same crap they always have – overpriced and not keeping with changing times. Hey – things do change…. But nothing sells itself.
James — a sober grand perspective. Well-said.
Hunter — my question to you is how can Opel vehicles improve? They’re already near the top, if not at the top, of each class they compete in. It’s not about building better vehicles — the quality, passion, technology, and all the other important attributes are already there. What Opel needs is to turn its numbers around by either cutting costs or by selling a lot (a lot!) more. I think the former is more realistic than the latter.
The German; So in the states if I go out and buy a say BMW, Iam buying it for its leather seats, prestige and I will throw in driving dynamics but beyond that for long term quality give me a break, you have to be loaded just to maintain the piece of $&@?. For long term reliability I will take a GM vehicle any day… I personally have put over 240,000 miles on a GM vehicle. Maybe not a Cadillac Northstar though… The bottom line is not everyone needs or should own a BMW, Mercedes or a Audi… These companies rely on over hyped advertising and the Rich to sell there overpriced garbage. It wouldn’t take much for any manufacturer to displace one of these so called luxury brands. The reinvention of Opel will come, beware… Cadillac will grow its market share internationally and become a dominant international luxury brand. These other luxury brands may think they can get by on what that have but the true innovator and quality producer will prevail.
C’mon Yabs, that’s total BS.
BMW, Mercedes or Audi are far from “overpriced garbage”. Drive one. You’ll feel it everywhere – in the little things and in the big things. But they are simply higher quality products from an initial quality and long term quality perpective. Your assessment that they cost more to repair is also off; the parts are nearly the same price unless you’re talking about a rare dual clutch tranny or another hard to find part. What’s more expensive is the per hour service you will pay a tech at a dealership. Make a friend in a 3rd party body shop or learn how to do it yourself. It didn’t cost any more to fix or maintain my M5 with 110,000 miles than it does my new Camaro SS.
Opel? I guess it all depends on what kind of cooperation GM will get from Opel’s unions and the future market outlook in Europe. Neither look to promising at the moment. The real question is how will the overcapacity issue be resolved.
Simple solution, merge Opel and Buick into one, keep the Buick name in the US and Opel name in the rest of the world, that would result in a premium, upmarket Global automaker that would not cannibalize chevy sales.
@Alex: Concerning Cadillac, please don’t misunderstand me! I have nothing against Cadillac. I like the design an I am sure that the quality isn’t worse than the one of a European manufacturer, but Europeans think very paradoxic when it comes to cars. That’s also the reason why you can’t compare cars to mobile phones or tablets.
GM tried to launch Cadillac in Europe some years ago. The cars were based on Saab/Opel platform but they failed. Toyota tried it with Lexus (very high quality cars, with a very good reputation) and they failed. Renault/Nissan tried it with Infinity and they failed.
Concerning Chevrolet in Brazil: The Chevrolet Corsa is the most sold Chevrolet in Brazil. Look here please:
http://focus2move.com/item/169-brazil-auto-industry-up-as-sales-surged-259-in-july-2012-fiat-share-up
To sell old generation cars in other markets is normal. VW does the same. And even if GM will change this strategy in the future, Opel will not be allowed to sell their cars in South America except the ‘great’ market of Chile.
What I want to say is: Opel has to be a very high level car manufacturer (quality, innovations, technic, marketing and so on) if it wants to survive in Europe. This costs a lot of money That’s the reason for the high expenses. You can only even this if you sell two or three million cars per year like VW does. GM doesn’t support Opel to conquer other markets like it does with Chevrolet or Buick although Opel has great potential.
GM tries to prevent cannibalization effects outside of Europe. This concern is baseless if you look at VW. They succeed to sell cars from VW itself, Skoda and Audi all over the world. Their growth is gigantic compared to GM. VW wants to be the greates car manufacturer until 2018 and I’m sure they will make it while GM will be the fourth behind VW, Hyundai and Toyota.
The other critical point is that GM uses Opel technic and hole cars to push Chevrolet and Buick in growing markets but Opel doesn’t profit from that. While preventing cannibalization outside from Europe GM pushes Chevrolet in Europe and complicates the situation of Opel.
We’ll see about Cadillac. There are always those who say that something can’t be done. In the long run, I see no reason that Cadillac will not be considered on the same level as the German 3 — even by Europeans. Perhaps not with the current generation of luxury car buyers, but gen X, Y, or later — perhaps.
As for Infiniti, the reason it failed (and continues to fail in other markets, such as the U.S.) is because it continues to sell rebadged and tarted-up Nissans. The G is a Nissan Skyline, the M is a Nissan Fuga, etc. Until Infiniti is established as its own operating unit with its own engineers, designers, etc., it will continue to fail. This is not the case with Cadillac.
I wouldn’t consider Lexus a failure, but rather a work in progress — as is Cadillac. Some markets will adopt the brand quickly (U.S.) while it will take some time to permeate the very traditional European markets. Just because it’s not selling now doesn’t mean it won’t sell 10 years from now. When thinking about these things, one needs to realize that there are very long-term strategies at play here — not overnight tactics.
As an example, think of Audi in the U.S. The brand was pure garbage and had very low sales volume in the 80s. Now, it is on track to see 30 consecutive months of sales growth in the U.S. There were long-term investments in product, quality, image, the dealer network, etc. for this to have taken place. There’s no reason that Cadillac (or Lexus) can’t do the same in Europe.
In regards to the Chevy Corsa in Brazil — yes, it’s a popular car that is *on its way out*. Again, the strategy of selling previous-generation Opels or Chevrolets in developing markets is coming to an end at the New GM. Developing markets will receive their own market-specific vehicles, as evidenced by the Chevy Spin, Agile, Cobalt, etc. Nevertheless, how does selling a 15 year-old Corsa in Brazil hurt Opel? I don’t see how it does, as that car has been paid for and has been profitable for Opel during its time.
In addition, why do you think Opel won’t be sold in South America outside of Chile? That’s the case *right now*. If successful, it will surely be expanded.
However, in regards to Opel being limited to its existing markets and not allowed to look for sales elsewhere, I completely agree with you. I also agree with the VW analogy. I’m a firm believer in letting Opel run free to any markets it wants to, including the U.S. Of course, there would be some things to “figure out” in the U.S., China, Canada, Mexico as it relates to Buick — but all of this can be “figured out” with research and some good thinkers and strategizers.
Finally, I would also turn each GM brand into an operating unit — the way it was prior to Roger Smith. This would result in unique vehicles for each brand while allowing each brand to be responsible for its own engineering, development, design, marketing, overall strategy, and — most importantly — profit and loss. This would allow GM to be similar to VWAG — where VWAG is a holding company containing VW, Audi, etc. being individually responsible for their own product and financial development.