Here’s Opel/Vauxhall’s Plan To Return To Profitability11
Earlier today, Opel/Vauxhall CEO Karl-Friedrich Stracke — who recently headed up GM’s global engineering efforts — outlined the automaker’s growth plan to return to profitability. The plan consists of ten essential tentpoles that will turn around The General’s loss-making business in Europe:
1. Model Initiative: Opel/Vauxhall will have invested about €11 billion in a comprehensive new model campaign through 2014. This year alone, the company introduces six new models. “We’re following a clear growth strategy and are pushing into new segments where we have not yet been represented,” Stracke said, referring to the subcompact SUV Mokka, a new Astra version, a completely new convertible and the Adam, Opel/Vauxhall’s stylish new urban vehicle. The Adam will be built at the Eisenach plant, making it the only model in that segment built in Germany.
2. Powertrain Initiative: Opel/Vauxhall will introduce three new engine generations in the next 18 months. This highlights the high pace of Opel/Vauxhall’s product offensive.
3. Environment Initiative: Opel/Vauxhall wants to expand its position as the leading manufacturer of alternative propulsions. “We’re very proud that Opel/Vauxhall is quite a bit ahead of our competition with products such as the electric Ampera,” said Stracke.
4. Export Initiative: Opel wants to enter new markets – including Australia, North Africa, South America and the Middle East. “We’ve already successfully introduced Opel to the market in Israel and we’ll expand our activities in China, Russia and Turkey,” Stracke said. The Opel/Vauxhall CEO made it clear that exports to regions outside Europe, however, won’t be enough to operate the European factories at full capacity. “We have to do our homework here in Europe.”
5. Quality and Customer Satisfaction Initiative: Opel/Vauxhall has launched a number of initiatives that should make the company one of the industry leaders in quality – both in products and customer service.
6. New Brand Strategy: Opel/Vauxhall is working on a new, clear brand strategy that is geared toward both traditional and attainable potential customers.
7. Increasing profit margin per vehicle: Opel/Vauxhall has launched several initiatives to increase its contribution margins. This, in particular, includes a thorough review of the material costs. Opel/Vauxhall also wants to reduce the manufacturing complexity of its cars.
8. New Alliances: Opel/Vauxhall is open to beneficial partnerships such as the one that GM recently made with PSA Peugeot Citroen: “At the moment we’re at a stage where we’re studying several specific projects with PSA in detail,” said Stracke. The Opel/Vauxhall CEO emphasized that the alliance is balanced in nature. “If we decide to move an Opel/Vauxhall development project to PSA, then we’ll balance it by bringing a PSA project to Rüsselsheim.” Stracke repeated that no jobs will be lost in the International Technical Development Center in Rüsselsheim because of the alliance – in fact, the alliance strengthens the development center’s future.
9. Production Strategy: Opel/Vauxhall is upgrading its manufacturing plants. “The clear goal here is to run each of the plants on three shifts,” said Stracke. The first example of that will be seen in conjunction with the allocation of the next Astra generation. “Given the forecasted market volumes, it would not be viable to produce in more than two plants. If we run these two plants with three shifts, the production costs for the next Astra generation will be significantly below the costs of building the current Astra. Right now we’re operating three plants with just two shifts.” Opel/Vauxhall is planning on investing more than €300 million in the two future Astra plants.
10. Studying Production of Chevrolet Models in Europe: “We’re in discussions with management in Detroit and Shanghai to study whether or not there is merit in building Chevrolet vehicles in Europe to improve capacity usage,” explained Stracke.
Stracke emphasized that this is not a cost-cutting plan and is instead a “comprehensive plant to quickly improve profitability, irrespective of if and how much the market is going to pick up steam.” The CEO is expected to present this plan to the Opel Supervisory Board in June.
Expect several follow-up articles about this plan throughout the week from the only place providing you with original up-to-the-minute GM News — GM Authority.
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I don’t think Opel/Vauxhall has a place in General Motors. Either sell them to a European company like Daimler or BMW, or just drop them. Globalize Chevrolet, Buick, GMC, Cadillac, and maybe even Holden, decreasing the amount of nameplates used even further.
I know it will take a lot of time and money to do this, but GM isn’t making a profit in Europe anyway, right?
Why ever not?
Merge Buick and Opel lineups so that means they both are going Global, just move Opel upmarket first to create room for Chevy.
And it would take many years for a new brand (Chevy) to achieve the 7-9% market share Opel/Vauxhall has in the hyper competitive European market. And I think were holding Opel to a standard no one is really at, except for the Germans, every company is losing money or breaking even in Europe right now, I dont care if Opel is not profitable until Europe recovers, which it eventually will. Im happy if Opel is breaking even for the next few years, meanwhile expand Cadillac and Chevy into Europe. Chevy wont take away Opel sales till it reaches the 4-5% mark, and when that happens, take Opel upmarket and merge its lineup with Buick.
GMC cannot have a global presence until it is a strong brand at home, then it can think about expanding.
And also I don’t see Buick being sold in Europe, Chevy and Caddy are one thing but Buick and even GMC are a totally different story. In Buick’s case it just doesn’t fit, merging the Opel and Buick lines into a global brand with Buick being a badge engineered Opels selling the Verano, as a stylized smaller Opel Insignia, and yes I know that the Verano is basically a badge engineered Astra but the design of both of them is different enough so that both could be sold in the same market, the Insignia as the Regal, move the Lacrosse up in size to a fullsized model, again heavily Opel Designed. I would also say in keeping the Verano as a smaller Buick Regal, more or less, that you could introduce Opel or more so Vauxhall as a youthful brand aimed at 20 some odds, selling the Adam, Corsa, and Astra. For GMC, lets get real here, introducing a truck brand to a country of hot hatches and small cars, is kinda like introducing a smart car to replace the full sized truck here in north america.
11) stop selling chevys in europe stick to buliding opel and vauxhall brands
Chevrolet has not got a good reputation in the uk, it has not long been a rebrand from daewoo, which had a cheap brand reputation, i realize the european market buys a fair amount of this brand, but i can not see it being much of a threat to the Vauxhall brand, maybe on the level of the agila, but thats one seriously troubled car, and has too much stigma to shake off from its predecessor.
Oh it will, you underestimate the effect good vehicles can have on reputation and the short memory of consumers.
Look no further than Hyundai, a couple of years ago, I would have laughed if someone told me that Hyundai will be a threat to the major global automakers. Nissan just revealed that it had to make changes to the development of the new Altima in response to the Sonata.
@Steve The reputation is something that can be changed in a moderate amount of time. And as far as GM is concerned, it’s a necessity.
The fact that Chevy has real product now (non Daewoo rebadges) will do wonders.
Skoda still has a lot of ground to make up, and yet they produce some really nice vehicles, time will tell with chevy
The Problem of Opel is… or… the way the money goes
If a Chevy is sold in Europe, Chevy in Korea and the US is making money. If a Chevy or Buick rebadged Opel is sold in the US or China, Chevy and Buick are also making money. The problem is how the internaly devide up the profit. Last year 250’000 rebadged Opels/Buicks (Regal and Excelle) where sold only in China but Opel was blamed for loosing money. Opels overcapacity in europe is caused by the new build plants in China and the Buick plants in the US. GM once had the policy to build the cars where they are sold. Now in Europe they import all chevys an some Opels from Korea. There are enough GM cars sold in Europe for all European GM Plants.
Thats partly true, I think Opel is losing the money it is because of an “Accounting Dump”, they are making the money from Opel developed cars that are being sold around the world.
My opinion of this plan? Nonsense. All of it. There is NOTHING ground-breaking here. Opel/Vauxhall needs something stunning to get them out of what they have dug themselves into. “Opel/Vauxhall is working on a new, clear brand strategy that is geared toward both traditional and attainable potential customers.” WORKING?!? You mean they have not found a solution to this and they are less than 2 years away from the target date? What are these fools playing at? They are joking. They all need to be fired and a new team with new ideas put in their place.