The upper management changes announced in late June at Chevrolet are possibly the biggest strategic shifts made by Dan Akerson in his three-year tenure as GM’s Chief Executive Officer. Signaling the automaker’s general discontent with the automaker’s progress on growing Chevrolet sales in Europe, Mr. Akerson appointed Alan Batey as the global chief of Chevrolet — the first such position in the brand’s 102-year history, while Thomas Sedran was appointed to the position of president and managing director of Chevrolet Europe, replacing Susan Docherty — who will leave General Motors at the end of September.
What does the series of executive shuffles mean for General Motors and for Chevrolet?
So, How Is Chevy Doing In Europe?
For roughly a decade, sales of Chevrolet vehicles in Europe have been meager, at best. Annual sales in the region have yet to reach 200,000 units, with sales down 31 percent through May of 2013, compared to a 7 percent decrease for the market — according to the European Automobile Manufacturers’ Association. By contrast, cross-town rival Ford outsells Chevy roughly 6-to-1 in Western Europe, reporting 939,409 deliveries in 2012.
“We have not done it as well as I would have hoped in Western Europe,” Akerson told reporters. “We have to take a fresh look.”
Illustrating the gravity of the situation are market share numbers through May of 2013: Opel held a 6.8 percent market share in the European Union, to Chevrolet’s 1.1 percent.
Chevy’s positioning, which currently overlaps with Opel — GM’s better-selling but financially-struggling brand, doesn’t seem to help either brand sell more vehicles in what is already a highly-competitive market. In some markets, some Chevys are currently priced higher than comparable Opel models, both of which share common vehicle platforms.
Luckily, it seems that GM has finally created a plan that calls for moving Opel upmarket, while allowing it to be a “mainstream” brand; in the meantime, Chevrolet is to become the “value” offering. Ultimately, GM’s desire is not to endow upon Chevrolet the image of an entry-level brand, but rather raise its profile globally and turn it into a strong global brand, along the lines of Ford, Volkswagen, and Toyota.
“We are going to assess Chevrolet, not only how it is priced but what content is offered and how it is positioned,” Mr. Akerson said. GM now wants to determine in which markets the two brands will compete against each other, he said. “That is one of the more complicated subjects in the company,” Mr. Akerson said.
The automaker has expressed a desire to position the two brands this way for years, but it doesn’t seem to have had the chance to get around to it until now.
Coincidentally, moving Opel upmarket will allow GM to further align it with the premium (but not luxury) Buick brand in China and North America.
Batey + Sedran = Chevy’s European Growth
It seems that one of the ways in which Mr. Akerson plans on bringing accountability for growing Chevy on a global level is by giving responsibility of the brand to Alan Batey.
A Briton, Mr. Batey, started with General Motors in 1979 as a mechanical engineering apprentice for Vauxhall in the U.K. Having held senior management positions for GM around the world, he joined Chevrolet in the U.S. in 2010 after serving as chairman and managing director of GM’s Holden subsidiary in Australia and New Zealand. Since, he has served as vice president, U.S. Sales, Service and Marketing and interim global chief marketing officer following the ousting of Joel Ewanick. In his new role as the worldwide principal of The Bow Tie, Mr. Batey will report directly to Mr. Akerson, with the goal of unifying Chevy’s identity across the globe to drive growth.
Interestingly, GM’s seeming inability to establish Chevrolet in Europe as a volume brand is the only weakness in what has otherwise been a precipitous global proliferation of the automaker’s largest brand. In that regard, finding a growth strategy for Chevy in Europe will be Mr. Batey’s top priority.
Working with Mr. Batey on growing Chevrolet in Europe will be Thomas Sedran. A restructuring specialist who previously was a consultant with AlixPartners, Mr. Sederan became the third head of Chevrolet Europe in 18 months. He has been an Opel board member since April 2012 and also acted as Opel’s interim chief executive before the appointment of Dr. Karl-Thomas Neumann earlier this year. Mr. Sedran replaces Susan Docherty, who — after 27 years with GM — has elected to leave the company to “spend more time with her family”. In that regard, Sedran will provide the proverbial “feet on the ground” in growing Chevy in Europe, and his appointment seems to be aimed at fast results — demonstrating CEO Akerson’s growing impatience with the brand’s performance in Europe.
“Tom has been there for two years and he understands the channel conflicts we have between Opel and Chevrolet and what we need to do to reposition them”, said Akerson. “We have done a pretty good job in Russia but we have not done it as well as I had hoped in Western Europe,” he added.
Outside Europe, Chevy Is Flourishing
While Europe has been a problem area for the brand, Chevy has posted impressive growth elsewhere around the world. The brand is sold in 140 countries (or is it 141 now?) — a two-fold increase from a decade ago. Its core global products, including the Cruze, Aveo/Sonic, Spark, and Malibu, are sold in over 100 countries. By stark contrast, Chevrolet didn’t have any global vehicles five years ago.
Here are some more eye-opening growth stats: in 2012, 63 percent of Chevy’s global sales were outside the United States, compared to 27 percent in 2002. In 2012, Chevrolet sales in China increased to 690,382 units (vs. 3,569 in 2002) — placing it sixth overall in sales volume rankings. More impressive is the fact that Chevy’s success is in lieu of haphazard marketing strategies and vehicle offerings containing “anomalies all over in how we position the product,” as described by Mr. Akerson.
Global Vehicles For Local Markets
Even though global vehicles are mostly the same wherever they’re sold around the world, Akerson realizes that each market has its own distinctions.
“We’ve got to allow for enough variability or flexibility to meet the market,” he said, adding, “I don’t want it done by discrete organizations. I want a unified perspective.”
In that regard, Mr. Batey’s challenge will lie in getting appropriate vehicles to the right markets. He used the Colorado mid-size pickup truck that launched in Thailand in 2011 as an example, saying that there’s a bigger opportunity to grow sales of the vehicle, which is expected to launch in the United States in late 2014 as a 2015 model.
“We have a great opportunity to really use our scale and globalize out from a portfolio perspective,” Mr. Batey said, echoing similar comments made by GM CFO Dan Ammann.
For Mr. Batey, however, it’s not about approving vehicle launches for any and all markets, as he will have to occasionally say “no” to country and regional directors who have gotten used to getting any and all product they want. There’s also the challenge of deciding which Chevrolet vehicles will make it as global products. Some believe, for instance, that the European- and Russian-market launch of the Camaro in 2011 was a forced effort that won’t pay off.
Opel Here To Stay
Despite calls from analysts (and some shareholders) to sell off the loss-making Opel-Vauxhall business unit, General Motors has made it clear that it plans to keep the subsidiary. Over the years, GM has initiated various strategies to bring Opel to profitability. None have resulted in a profit, as the business unit has lost tens of billion of dollars for its parent, while remaining GM’s largest and most prominent in continental Europe.
Although offering a very competitive product lineup, Opel is widely believed to be suffering from a damaged brand. And in that regard, it needs some tender, love, and care, which is why Opel now has its first Chief Marketing Officer in Tina Müller. Hired from outside Opel, and outside the automotive industry, Ms. Müller’s appointment separates the sales and marketing roles, which were before fulfilled by Duncan Aldred.
The GM Authority Take
So from a very general perspective, growing both Chevy and Opel in Europe seems to revolve around two major objectives:
- Reposition both Opel and Chevrolet relative to each other, so as to eliminate competition
- Improve the public perception of both brands
For the time being, Mr. Batey, Mr. Sedran, and Ms. Müller have their work cut out for them as they embark on repositioning and building the Chevrolet and Opel brands, while fixing the public perception of both.