Stupid Decisions: Opel Could Cut Costs By Using Parts Not To GM’s Specifications
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Opel chief executive Thomas Sedran told German newspaper Tagesspiegel that the automaker could significantly cut costs by using materials different than those required by parent General Motors.
“GM has global requirements for parts and components that are unusual in the industry”, said Sedran. “A starter is tested at 40 degrees below zero, just as would be needed in Alaska, otherwise it fails the test.”
“The supplier can only meet these if he uses expensive materials.”
The GM Authority Take
This kind of penny-pinching is completely unnecessary. Forget about design and engineering — it’s the quality of the parts that ultimately make or break a car/car brand, its reputation, and everything in between. In that respect, GM’s parts requirements are top-notch — a policy that results in much-better products than those offered by the competition. People may not see or feel their benefits on a daily basis, but they will surely appreciate the extra effort (say on an especially cold winter morning) that GM has placed in the requirements of its parts (by being able to start their GM vehicle, while the neighbor’s Kia keep cranking, but never turns over).
But let’s imagine that Opel were to start supplying its own parts… has Mr. Sedran considered the repercussions the move may cause for the larger GM? In essence, Opel sourcing its own parts may result in a negative effect on the economies of scale (read: price increase) for the larger GM parts sourcing operations.
You know, it’s this kind of unnecessary cost-cutting that brought GM to its knees in the quality and reliability (and image) departments a couple of decades ago. Perhaps Mr. Sedran should focus on what truly matters to Opel — major overcapacity issues in Europe that cost the subsidiary an arm and a leg every day — and take care of those (read: shut down some plants) instead of worrying about pinching a penny here and a penny there.
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My 1999 Saab 93 tells me this isn’t the first time a GM division has done something like this.
On the plus side Saab was told by GM to use their parts, but Saab was not happy with the quality of the GM components and used other higher quality parts, GM was quite upset with Saab as the wanted a rebadged version of GM cars, TOP GEAR UK recently did a very informative piece of Saab and its history . as an Saab owner you may like to check it out.
Ironically Opel is doing the opposite of Saab…
Maybe 1999 was a year when they tried GM parts out. I had a radiator hose to blow that had GM stamped on it. Interior plastic pieces are falling apart, switches not working etc. Engine and tranmission are fine with 186,000 miles on them. I’ve owned older Saabs that I drove until 280,000 miles with a lot less problems.
I do wonder whether Saab’s dissatisfaction with GM’s parts was at a time when GM’s standards for the same were weak. A gut feeling tells me that this was the case.
People like Thomas with these insanely pathetic ideas to try to save money should be relieved of their office as soon as they make a statement such as that. As the article correctly states, it’s the overcapacity that’s keeping Opel on its knees and not the over quality of vehicles they produce. Grisky should be appointed CEO and be given a decade to bring it to profit
Regional specifications partially explain why the old Aveo had so many issues but the new Sonic is far superior.
Does Opel really want to become an emerging market brand – death by a thousand cuts? Opel’s brand perception is already on the rocks (to everyone but Opel employees).
Opel doesn’t engineer, manufacture, or sell enough vehicles to pull this off successfully as a stand-alone organization. Sorry, guys. You’re just going to have to play the global game like everybody else.
Quite right, this harks back to the early 1990s when Lopez and 3 of his cohorts were responsible for drastically cutting Opel’s supplier costs, more than any other manufacturer, and resulted in suppliers just reducing quality to meet cost targets, he then went to VW and stole a whole raft of confidential Opel future product information which he took with him. In addition GM Europe CEO in the 90′s Louis Hughes plundered Opel finance to keep GM US operations afloat which starved model development funds in Europe. These 2 people were instrumental in causing serious damage to Opel and from which it has never fully recovered. The fact that Sedran is even considering this sort of proposal is very worrying indeed.
I fear that with stories like this, we are only looking at the tip of the iceberg of GM/Opel stupidity
If Opel goes this route, they will end up with products like the Korean sourced Aveo. Trust me, as a former owner of one, NO ONE should want that to happen! The Cruze Eco I now have is an incredible improvement.
What a no win statement. I guess a backhanded compliment to GM. I think there is still this notion that opel could be a global brand and stand on its own within opel. This guy should at least be demoted.
That such a senior high level executive is even considering these actions is very worrying, things must be really bad in Europe. And to make it worse, VW is trying to kill its competitors, kind of like what the Big 3 have done in the past.
Penny wise, pound foolish…
VW is doing this with the current Jetta.
I’m not sure VW is doing the same with the Jetta.
They’re moving it into the mainstream compact segment to go against Corolla, Civic, Cruze, Focus, etc. — from its traditional “between mainstream and luxury” position. That involves decreasing the quality of certain parts (interior trim pieces), but I’m not sure that applies to actual componentry.
Thomas Serdan is right because markets are different and people are too.
How often does a US driver changes the engine oil? Once every other month? In europe most people change after a full year.
How many Diesel passenger cars are sold in the US. In germany they sell about 45%.
Are cupholders important in America? I think so. In Europe nowbody cares about that.
How foolproof must a car be to be leagaly save in the US? The lawsystems are different.
As long as Opel-Cars are blocked from the US Market there is no need to fulfill requirements that are only usefull in the US.
Why do you think is the VW Passat that is sold in the US a different car than everywhere else in the world?
Michael — the U.S. Passat you refer to as being different from everywhere else in the world isn’t entirely accurate… the North American-market Passat is the same car in China and Korea… and is really a step back in every single aspect compared to the outgoing model with the exception of rear-seat room. Even so, I believe that VW will go back to a single global Passat within the next 2 generations, as they didn’t win anything by NOT introducing the new larger Passat to other parts of the world.
But outside of all that, the items you mention as being different between markets are actually not that different. An engine bay and a vehicle’s powertrain configuration is engineered from the get-go to accommodate various engines and transmissions — diesel, gas, 3-,4-,6-, or even 8-cylinder, electric, etc.. That’s irrelevant. Also of less relevance are cupholders, or the safety stuff. The bottom line is that one car can be engineered to pass any and all tests with flying colors, no matter the country of sale, WHILE being cost-effective. There are minor variations here and there, but for the most part, the standards and use-cases are centralized enough that a global car not only makes sense, but is becoming a prerequisite to competing effectively on a global scale.
In addition, I’d wager that by trying to skimp on parts, Opel will actually diminish the scale enjoyed by its business relationship with GM and will end up paying more for lower-quality/inferior items. And finally, if Buick and Opel are in fact undergoing a brand and vehicle merger of sorts, then it only makes sense to engineer, design, and think globally.
Ok Alex – the Passat NMS is for NA, China and Korea.
If you engineer a car/engine/component you have special reqierements to fullfill some are made by law others are made by circumstances in your company like the assembly plants infrastructure. If there are more requirements you have less options and your car or even a single component is getting more complicated or heavier, but allways more expensive.
For example take a look at the latest IIHS-crashtest results compared to the Euro-NCAP. I don’t realy think that the Lexus IS, Audi A4 or MB C-Claas are low quality cars. If you want to build a car that is able to stand both tests you can be shure this will increase the costs.
Why is the current Astra 200 kg heavier than its competitors? Maybe because there is a buick in china and a chevy in korea that share the same components and have to fullfill global requirements. But in Europe the fuel consumption is maybe a bigger issue than in Korea and China. And if you want to be competetive in europe, and you want to me known as a high quality car maker, you have to use state of the art technology on things like weight reduction. On the other hand, in China or the US there is maybe a bigger focus on noise-reduction as a sign for high quality.
Different standarts don’t say anything about higher or lower quality. But I think trying to build a global-car that performs great on every market is simply not possible in mass production. Maybe in the premium or luxury segment where people pay more for the name or the image of a brand. In Mass production you need on the edge designed and not the all-purpose solution.
If you design a mass product, you should think globaly and use every component that is avaliable in a company that fits your needs, but you have to act localy if you have the opportunity to save money and I think is what Thomas Sedran was talking about.