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General Motors Prepares To Grow Chevrolet In Europe: Analysis

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:

  1. Reposition both Opel and Chevrolet relative to each other, so as to eliminate competition
  2. 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.

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Comments

  1. Excellent analysis! A very good and timely information gathering. For these types of items is that daily entered this portal …

    Greetings!

    Reply
  2. Very good article and analysis, Alex! Cheers!

    Reply
  3. What is stated here is only the tip of the needle.

    It was a given with GM and what they are doing. Buick and Opel along with Vauxhall are joined as one now. Chevy has been there and has made a dent in the market.

    Chevy has things they need to achieve.

    First off lose the image of a cheap rebadge Dawoo.

    Second build and tune the models to the local markets not only for Europe but with in Europe. Option packages, Engine Packages along suspension tuning will be key.

    If you are going to England and you want to sell a Camaro and Vette Get the wheel on the right side.

    Price is important as brand loyalty is prime in this market. You make and offer a car that is a good value at a reasonable price under the others and people will give you a try. Then you will have to take the time to grow the trust and sales. Ford is not seen as an American car here it is as Euro as VW in their eyes so do not expect GM to out sell Ford next year.

    Establish a solid sales and service network and don’t muck it up.

    Keep the models prime on MPG as this is a big expense here and GM has done well with the small Diesel but they need to make sure the cars get good MPG.

    Fixing Opel as a brand is not as difficult as some may think. The real challenge is the German labor Unions and the economy. The Unions are tough and the Economy is not helping higher priced cars there right now.

    The joining of Opel and NA Buick is key as the sales in China will support them with new and even better products than they have now.

    Finally this is not a 5 year fix. This will take time and a concentrated effort that when mistakes are made they are corrected fast. This deal needs to be proactive if anything even looks like it is a problem.

    Chevy is doing well most other places as they have been in many markets for years. Now we see them moving into ever little market they can to pick up sales. Most of the global platforms will work with tuning and packaging for each market but they will still have to make some models on the side for some markets and leave them out of others as there would be little demand like a Traverse in Europe.

    There is so much more that can and needs to be addressed on this topic. This is more than just talking cars as you have to add in economic, Labor, marketing, political and even safety and environmental standards to this.

    The reality is GM has picked one of the toughest times to choose to expand in Europe since WW2 but it has to be a player as in today auto market being out of one market could doom you in the future. Lets face it Fiat is not in America because it was a Cool Idea but the fact is they may not survive if they relay only on Europe. Same for the China market any major MFG not there is taking a big risk.

    There is much more I could bring up here but time and space limits.

    On the plus side is we may see cars here we would never have seen without GM in Europe. We already have the Cruze Diesel and without Europe sales it would have never happened.

    The thing is we all need to look at this big picture and take in all the facts and issues involved. This is more than about just what models and more about building marketing and selling cars and all the issues surrounding them in the real world.

    The big key is GM has people in place in Europe to make the calls needed to connect with the market. Just do not stick people in charge from Detroit and expect them to know what to do unless they have lived there and understand what it means to be a real European. This is where Lutz was strong as he was a Euro as much as a Tough Detroiter.

    Reply
  4. I say cut vauxhall, cut opel, (I don’t care about what locals say) send chevys, buick and caddy over to fill the Europe market! Economy, min lux, luxury! It’s not like GM is going to lose more sells! It’s bad enough now! GM replaced daewood and people are buying chevys in there place!

    Reply
    1. If you think that people in Europe will buy Buicks instead of Opel/Vauxhall (1 million units saled in 2012, rank 3 in EU, rank 4 in hole Europe), then you have absolutely no idea! Sorry! Same for Chevrolet! The current lineup is a crap! Sales are down more than 30%. Europe is not NA and it’s not Asia!

      “I don’t care about what locals say”
      With this sentence you disqualify yourself!

      Reply
    2. Why do you think that an Opel Astra would sell better in Europe when it is badged as a Buick Verano?

      And who will develop the next Verano, when you “cut vauxhall, cut opel” succeeds?

      Reply
  5. GM is at the bottom now what’s going to change if they only sell chevys buicks caddy! See you missed the point altogether, if GM is going to lose money in Europe then they might as well do it selling there core brand!

    If chevys won’t sell in Europe then why do Fords sell? What’s the difference?

    Reply
    1. LOL, The difference between Chevy and Ford in Europe is that Ford is seen as a mainstream brand with cars that steer exceptionally well as the distinguishing brand value. Chevy is seen as rebadged Daewoo that asks mainstream prices for budget cars.

      And tbh, Chevrolets aren’t excellent in any aspect, they are mediocre at best.

      Reply
  6. Difference is if GM’s European brands disappear people will NOT buy Chevy they will move to GM’s rivals instead & GM knows this.

    Reply
  7. Just like they said when daewood was being replaced! Now chevy sells just find in those parts of the world!

    You never answered as to why fords sell but chevys won’t in Europe! I think its just like any part of the world if you build a great car it will sell!

    Reply
    1. Ford sells well in Europe because Ford has a circa 100 year history of building and selling cars across Europe, from the Model T to the present day Focus.

      Similarly, Both Vauxhall and Opel have been established in Europe for more than 110 years.
      Chevrolet as a mainstream brand in Europe … well its not been even 10 years to date.

      Mention Chevrolet and the European expectation is for Corvette, Camaro, Impala and Silverado (shame that they’ve never resurrected Apache!), BUT NOT Aveo or Spark!

      You can’t just turn-up and buy history. It’s rumoured that Cadillac is about to relaunch a fourth challenge at cracking the UK and European luxury segment. No doubt, they’re delivering good product these days (I’ve driven a recent CTS) BUT SADLY, I’M NOT HOLDING MY BREATH.

      Reply
  8. Besides GM owns like 6 % of the market in Europe it’s not like GM would be losing much by switching

    Reply
    1. GM doesn’t own anything.

      It is all up to the potential customers to decide which car they buy (if they buy a new car at all; I for example don’t, I subscribe to car sharing).

      Reply
  9. If chevys buicks are so bad then why do they sell so well around the world! Remember chevy buick were around long before daewood can and went

    Reply
    1. Buicks do not “sell [..] around the world”, but only in China and North America, dear Brian Ritter. And the Buick lineup is different in both markets. While both Buicks share the Encore, Verano (Excelle GT in China) , Regal and Lacrosse, the best seller of the Chinese Buick is still the original Excelle (Kailue), a rebadged Daewoo Lacetti (Nubira in some places).

      Also Chevrolet and Buick were never really present in Europe. Daewoo, on the other hand, had a long-standing presence as an importer. Till 2004, when they were renamed to be Chevrolets.

      Reply
  10. Ford like GM’s European company’s have been building cars here (Ford since 1911 first at Trafford Park, Manchester then at Dagenham, Southampton & Speke) so are seen as European also just of interest Chevy has been and gone a total of 7 times here in Europe and are just not connecting with European buyers one thing that stands out is their sponcership with two English football teams who incidentally have a very fierce rivalry & don’t like each other, own goal for Chevy!

    Reply
  11. So if people in Europe won’t buy chevys and buicks but will buy opel and vauxhall then your saying people are buying a name and not the car when some of the cars are very similar

    Reply
    1. Right, Mr. Ritter, that’s why car companies have marketing departments who work to create a perception of a brand. Large parts of the automobile market belong to those people who buy an image, not a means of transportation.

      Reply
  12. So just keep putting money in a brand that doesn’t deliver

    Reply
  13. Brian you have to look at the big picture. In the future automakers will have to sell brands and models globally or risk the chance they will fade and die. Just look at how many brands and models have failed already. We even know now that even companies like GM are not too big to fail.

    The key here is to find the products and models that will connect with Europe and present as a quality car and value. Money is tight and if you can give them a damn good car and a damn good price you will grow in the segment. This is not a over night deal and will take time and good planning. I have no idea why people think things will change over night with markets like this. They may never lead but it is important that they at least become a player in the market.

    As to why Ford is doing ok in Europe. Well Ford is losing money in Europe but they have done well as they have been in the Euro market since the 20’s and are seen not as an import but as Euro car. Ford has sold cars there for years that were designed and built in Europe for Europe. Today the cars Ford is building is like everyone else and will be for Europe the states and every where else with the needed changes for each market.

    The reality is the new products from here forward will be designed for Europe, America and China and not just taken from one market and adapted to another. Opel is not going to convert the Lacrosse to Europe like Buick took the Astra to America. In fact the next Regal and Lacrosse will be designed and built for both companies not just one and adapted.

    We have to see Buick and Opel as one now not just two companies sharing product. Also we have to look at Chevy globally and will be nearly the same world wide less the few special market vehicles they will provide for added profits in that market.

    This is going to take time and in 10 years if GM can show a profit and hold a gained share in Europe they have accomplished the first step of what they need to do.

    Reply
  14. The company’s your advocating getting rid of are a part of Europe’s heritage & are close to people’s hearts (you cannot buy this!) years of providing products people want (cars, vans, trucks, buses, bikes, even tanks during the war) and that’s just wheeled products, several factory’s providing work & building desirable products giving pride to not just those building it but for the country too. Building & selling cars people have emotion with (and giving us a performance version of it) having a excellent reputation of building the best & fending off foreign opposition on merit & not just patriotic reasons. GM has in Vauxhall & Opel company’s which connect with Europeans & have done for decades this along with excellent products ensures sales come reasonably easy.

    Reply
    1. So if opel and vauxhall connect with Europe so well then why don’t those cars fly off the lots? Why isn’t gm raking in the $$$?

      It’s funny that in the US people buy foreign bands why is Europe any different?

      So what you guys are saying is you will buy a opel but you won’t buy a buick even if it’s the same car just a different emblem on the hood?
      If this is the case then I have no respect for you and your region of the world!

      Reply
      1. The keywords to think about are “brand”, “perception”, “image” and “marketing”.

        Reply
  15. You have to understand there are Vauxhall (Opel in Europe), Ford, VAG & BMW fans/enthusiasts and of course Mercedes, Jaguar types who don’t so much call themselves fans but are loyal these bunch pretty much have Europe sewn up this is what Chevy & others Chrysler etc are up against. Btw I have nothing against Buick, Opel or even Chevy I just like what I like & I’m loyal to one brand.

    Reply
  16. If opel and vauxhall are Europe heritage then why aren’t those two companies owned by a European company? If you really love those brands so much then why don’t you buy more of them?

    Seems like opel and vauxhall need gm more!

    Explain to me why you would buy a opel but not a buick even if they are the same car? Same platform, engine’s, sheet metal with changes to the emblem?

    Reply
  17. GM purchased Vauxhall in 1925 because they was having difficulty selling Chevys, Buicks etc in UK later 1931 Bedford Trucks was introduced & Opel purchased in Europe. GM has owned Vauxhall ever since although had to sell Opel during WW2 then buy again after war.

    Reply
  18. Ok so tell me why opel doesn’t sell well if uk loves opel so much

    Reply
  19. The UK buys Vauxhall’s not Opels, I’m not sure what you mean when you say not selling well here in UK Vauxhall outsells Chevy by about 24 to 1.

    Reply
  20. You guys can argue all you like but Opel and Vauxhall names will remain just as Holden. But they will be tied to a much better and higher level car than they already are. They will not be expected to compete with the low level cars and high level cars any longer. They will be more focused and targeted at low end luxury and carry levels of trim and performance not given to them before.

    The cars will be developed from the start with Buick, Opel and Vauxhall in mind and not just be a rebadge of each others cars.

    The fact is each name plate does not really compete now and has it’s own equity.

    But the reality is Chevy is going to come in and will be the main mover and will work to build the market with the cars that it shares around the world no unlike every other global auto mfg. does now.

    The key for Chevy is to offer good MPG, Solid quality for the segment and service and a low price. At this level the name means less to those who what the most car for their money. Why do you think people buy Hyundai’s today?

    As cars get more expensive name means more and people with the money are willing to pay more for the name.

    Reply
    1. When I read your posts, I think you overestimate the cooperation between Buick an Opel! You mustn’t forget that small cars and MPVs are very important for Opel/Vauxhall. Last year Opel sold one million units. Corsa, Meriva and Agila made 40% of all these sales. This year Corsa might be Opels most important vehicle by sales. If you add LCVs to the sales you have even nearly 47%! All these cars will not be shared with Buick! That is a fact! Small cars and MPVs will be developed with PSA and LCVs with Renault and Fiat. I am not sure about the future Zafira but if this car will also not be shared with Buick you have far more than 50%.
      For some cars, yes they will be one brand! The cooperation will also make possible to expand the lineup for both sides but the impact for Buick will be much more important than the one for Opel/Vauxhall.

      For the next ten years Opel will not become a soft luxury brand and not a premium brand like Audi and BMW. The goal is to reach the level VW has still reached! Opel will stay a mainstream brand also in the longterm.
      I suppose moving Opel upmarket does not mean to become a premium brand but to offer some premium niche models like Cascada, Monza or an Omega successor which will help to improve Opel’s image. So I think to realize such niche cars is -beside cost reducing- the main reason for Opel-Buick cooperation! My suggestion also fits to what Karl Thomas Neumann said lately in a lot of interviews: That Opel will stay mainstream and in the center of the society! He also announced that the next gen Zafira will be cheaper than the current and return to the middle of the market but the car will look more dynamic than the current gen! So the future cars will look premium but they will not be priced premium! This is an image thing!

      So the correlation between Opel and Buick is very very important for the future of both brands! No doubt about that! But the statement that they will become one brand is too far (at least for the Opel point of view)!

      Reply
  21. Thanks be to God! May Matt Birk continue to be the Lord’s witness till the end of his days on earth and rejoice eternally with Him in heaven. Would that the whole team were on fire enough to follow such a lead!

    Reply
    1. There is no such thing as god.

      You disagree? Prove your god exists.

      Me prove there isn’t? Well I don’t see any gods here.

      And if you’re going to say ‘souls’ go to magic places when we die, you’ll have to prove souls exist too.

      Reply

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