General Motors’ European division, Opel, is steadily clawing its way to financial profitability. Despite newfound difficulties such as withdrawing from the Russian market, the business unit expects to break even this year, and hopefully post a slight profit in 2015. One of the biggest factors contributing to this progress is an increase in net pricing (similar to the Average Transaction Price in the Untied States).
Specifically, Opel improved net pricing by €700 million Euros in the first nine months of 2015. According to Opel CEO, Karl-Thomas Neumann, that was the result of higher-contended vehicles as well as trimming vehicle incentives and discounts.
“We are selling more options and trim lines, such as with the new Astra”, Neumann told Auto News in an interview. “Secondly we are doing less tactical spending [offering discounts and incentives]. We would have had much more growth had we had spent more [on incentives] on the cars’, he added.
The GM Authority Take
Not only is the achievement of improving net pricing commendable given the intense competition in the European market, but Opel’s ability to have resisted the urge to offer discounts to increase sales volume at the expense of profitability.