GM Announces Plans To Withdraw Chevrolet From Mainstream Segments In Europe
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General Motors has just announced a complete about-face of its European market strategy related to the Chevrolet and Opel/Vauxhall brands.
Starting in 2016, the automaker’s Chevrolet brand will no longer have a mainstream presence in Western and Eastern Europe “due to a challenging business model and the difficult economic situation in Europe.” Instead, the fourth-largest global automotive brand will focus on offering “select iconic vehicles” such as the Corvette in Western and Eastern Europe. Chevrolet will, however, continue to have a broad presence in Russia and the Commonwealth of Independent States.
The move, according to a GM news release, will “improve the Opel and Vauxhall brands and reduce the market complexity associated with having Opel and Chevrolet in Western and Eastern Europe.” Given that in Russia and the CIS the Opel and Chevrolet brands are “clearly defined and distinguished”, they are more competitive within their respective segments.
The change in business strategy marks a significant departure from the action plan from a year ago, when The General intended to turn Opel/Vauxhall into a slightly more premium mainstream brand and make Chevrolet the value brand in Europe. The news coincides with GM’s announcement to grow the Cadillac brand in Europe.
To Accelerate Progress
The General is characterizing the change as a way to “accelerate its progress in Europe by bolstering its brands in the mainstream” segment. The automaker also added that Chevrolet will work closely with its dealer network in Western and Eastern Europe “to define future steps while ensuring it can honor obligations to existing customers in the coming years.” One of these obligations is supplying parts and providing warranty work to existing Chevrolet owners — something that GM fully intends on carrying out and making available in the affected markets.
“Our customers can rest assured that we will continue to provide warranty, parts and services for their Chevrolet vehicles, and for vehicles purchased between now and the end of 2015,” said Thomas Sedran, president and managing director of Chevrolet Europe. “We want to thank our customers and dealers for their loyalty to the Chevrolet brand here in Europe.”
The newfound strategy as it relates to Chevrolet “will allow us to focus our investments where the opportunity for growth is greatest”, said General Motors CEO Dan Akerson.
Korean Production
Given that most of the Chevrolet product portfolio sold in Western and Eastern Europe is manufactured in South Korea, GM will increase its focus on “driving profitability, managing costs and maximizing sales opportunities in its Korean operations” as it looks “for new ways to improve business results in the fast-changing and highly competitive global business environment.”
“We will continue to become more competitive in Korea,” said GM Korea President and CEO Sergio Rocha. “In doing so, we will position ourselves for long-term competitiveness and sustainability in the best interests of our employees, customers and stakeholders, while remaining a significant contributor to GM’s global business.”
Special Accounting Charges
As a result of the decision to no longer offer Chevrolet vehicles in mainstream segments in Western and Eastern Europe, General Motors expects to record net special charges of $700 million to $1 billion primarily in the fourth quarter of 2013 and continuing through the first half of 2014.
The special charges consist of asset impairments, dealer restructuring, sales incentives and severance-related costs that will “pave the way for continued improvement in GM’s European operations through the further strengthening of the Opel and Vauxhall brands”. Approximately $300 million of these net special charges will be non-cash expenses.
Additionally, GM “expects to incur restructuring costs related to these actions that will not be treated as special charges, but will impact GM International Operations earnings in 2014.”
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I am glad they pulled the plug. The whole Chevy Europe strategy was a disaster.
I wonder what they do with the Manchester United sponsorship. That’s over 70 million USD per year thru the 2020-2021 season? Can they switch the sponsorship to Vauxhaul?
Here’s a story about this absurd deal from 2012:
http://www.mirror.co.uk/sport/football/news/manchester-uniteds-chevrolet-sponsorship-is-worth-1215088
Wow, talk about a roller coaster ride regarding Europe, decisions change daily. How will this impact Chevrolet’s image globally. I am shocked GM doesn’t have a stronger case for the Chevrolet brand in Europe, is throwing in the towel really the answere.
Overall good move, leave the field to Opel, add Chevy in niches where Opel is not present. Pretty much Buick/Opel approach in China.
@ Dan: ManU may have been desperate attempt to turn around Chevy’s fortune in Europe, but I don’t think so, the deal still gives them lots of exposure, notably in Asia. Vauxhall is sponsoring national squads of the different nations across the UK.
It would make a lot more sense to switch the sponsorship to Caddy. Much better fit and would provide some exposure as they launch world class products.
Well it took long enough for GM to see sense but at least they got there in the end. Next on the list: Dear Manchester United please can we have a refund!
This makes more sense, but GM still wasted billions and wasted time on this. which is ultimately on Akerson. Once they decided to keep Opel/Vauxhall (which was a long process itself), there was no room for Chevy in Europe. Yet Akerson & co kept slamming away for a couple of years with a strategy that couldn’t be explained without a flow chart.
Rob I think you would need more than a flow chart to explain that level of stupidity!! lol
GM made a bad decision again but is someone surprised any more? Nope. And VW can handle three mainstream brands, Volkswagen, Skoda and Seat. We’ll probably see more Chevrolets with Opel/Vauxhall badges, like Mokka, Antara and Ampera now.
This strikes me as rather a ham-fisted solution to a problem, if it really was a problem. GM surveys claim that few people in Europe had both Chevrolet and Opel on their shopping list. This suggests that Chevrolet market share, however small, will go to competitors rather than Opel.
What appears to be the problem is that Rick Wagoner had a vision of Chevrolet as a global brand, but then he was old GM. So also was Alfred Sloan who encouraged sibling rivalry amongst GM brands. But that era ended when Divisional Managers who were close to the top of GM were ultimately replaced by brand managers or VLEs. Who for instance is in charge of Buick at the moment? Whoever these people are, they are not high enough up the ladder to take a stand which might jeopardise their career.
If other manufacturers can market multiple brands, why can’t GM? Opel and Vauxhall have long histories which is significant to many Europeans. But then there are others who simply shop around for something that is cost effective and appealing, without any brand preconceptions. Why take Chevrolet away from this potential market.
It is understandable that Chevrolet is a puzzle to Europeans. It used to be large and American, now it is small and Korean. But it was successfully launched under Hardy Spranger and did contribute to Daewoo (now Chevrolet) finally becomming a successful Asian operation for GM along with China. Like it or not, Chinese imports will commence at some point and the Chevrolet infrastructure could have come in handy. Rather than fear this Chinese invasion, it would have allowed GM to influence the process.
Let’s see what happens to Opel/Vauxhall in the next decade or two, hopefully things get better.
Let’s also hope that Cadillac doesn’t meet the same fate as Chevy.
I guess the Europeans got what they wanted! Now what will be your excuse for not buying a Buick or Cadillac?
I dunno. You seemed to have all the answers back in August.
“Gm is saying good by to opel in Australia Germany England might be next”
http://gmauthority.com/blog/2013/08/july-2013-opel-sales-up-11-percent-chevrolet-up-33-percent-in-germany/
I was completely surprised by this decision. I did not all all expect such a drastic, radical solution to GM’s problem on the European market.
Though – when I think about it.. Before was the decision to end the marketing of Opel cars by the end of this year (which is the end of this month). I heard some people say that this was a decision of the new Opel CEO K.T.Neumann (KTN for short). This is mirrored by withdrawing the Korean Chevrolets from the market in Western and Eastern Europe, except the former USSR.
Introducing the Chevrolet brand in Europe by simply renaming the Daewo cars and dealers was a shot in GM’s own foot. Apparently some managers in Detroit had really the idea that they could get rid of those pesky Germans at Opel having their own ideas, but finally woke up from their pipe dream when the decision was taken to sell a majority stake in Opel to a consortium of parts maker Magna, a Russian bank and a Russian automobile manufacturer, but when push came to shove and they found out that the Opel development center was a central part of all technical development and research within GM, invaluable and irreplaceable, Detroit withdrew from the sale.
Maybe GM might be better off by continuing and deepening the badge engineering between Opel and Chevrolet with a clear distribution of those two brands (plus Vauxhall and Holden) across countries and continents, and keep Daewoo as a real bargain basement brand like Renault has Dacia, instead of trying to push Opel in a semi-luxury brand like Buick.
I read somewhere (but can’t find it in the official press release on the matter) that the Chevrolet advertisement contract with Manchester United would continue since ManU was said to have a large following in other countries where Chevrolet will still be marketed after January 1st, 2016
@LuisF:
Why then did GM not keep the Daewoo brand and dealer network as what it was: a bargain basement cheapo brand just like Dacia is to Renault, instead of the futile attempt to replace the existing Opel/Vauxhall brands by giving Daewoo another name, and then departing from the bargain basement offer into more expensive segments, with the inevitable consequence of losing market share to Dacia and others.
,
I could boast, but I could see this decision coming from last week. A pity some of you didn’t.
This is good for GM; no more needless overlap and their full attention devoted to Opel. They already have a greater percentage of the European market with Opel than they ever could have ever had with Chevrolet.
Cadillac, as we know, is another matter that’ll get addressed in the future.
Its not a good idea to retire from Europe, there is the next Cruze, Sonic/Aveo coming and with a good marketing strategy GM could reverse the tendency and make Chevy attractive in a hand. In other hand GM should make Opel as Buick, more premium. For Cadillac it needs diesel engine to success in Europe.
These moves could spell the end of manufacturing in Australia. I say this because the extra capacity in Korea will probably be sent to Australia; thus, no need to make Commodores in Australia.
GM Korea assembles a version of the Lacrosse in Korea; so I can see a Commodore replacement being assembled there to cut costs and maximize output.
I am not shocked here but I am interested in the product mix we will see now. Will Opel and Vauxhall be a mix of their own product with selected rebadged Chevys for lower priced segments. Will they still sell the Camaro and Corvette as Chevys in Opel or Cadillac dealers? This will be interesting to see what they do.
Also note there is rumors going around Holden will be closed in 2016. If true will that mean they will just be rebadged Chevys as Holdens? Will they just make them all Chevys? Is it even true.
While not something you would expect they have already announced the Holden Commodore will be gone in 2016 and the rest of the line is already Chevy. Also there is word the RWD sedan will come to North America for production to replace the SS and could be exported.
A lot to speculate on and contemplate here. It will be interesting to see what they end up doing.
While some say GM is dumb for having done this at least now they are willing to make change to areas in need. In the past the old GM would just have kept pumping in more money to programs with little hope of success. Also if they did change it would have taken decades to change vs. a few years.
If running an auto company was so easy we all would not be on the web doing it. If you do not fail at some point it only means you are not doing anything. Even Edison failed more than he succeeded.
This more of a indictment on the people of Europe then it is of GM, those pathetic morons wouldn’t buy a chevy no matter how much GM improved those cars over the years!
Being thick headed and stubborn got the people of Europe what they wanted, protecting opel even if both brands come from the same company!
So don’t blame GM for this failure, the blame goes on the people who wouldn’t give chevy a chance no matter how hard GM tried or changed the car!
I don’t understand why people still want to bag on Europeans for not wanting to buy Chevy. Dude, it’s a crowded market, people here in the US still give GM crap about its bankruptcy, why don’t you start insulting them for a change, huh? Leave them alone, with the exception of the corvette and camaro, there is nothing exciting about chevy’s lineup in Europe, they don’t have the opportunity to buy a $40000 impala, or a $50000 silverado, they’re not as spoiled as we are here.
GM has pumped money to non-profitable Opel for about fifteen years. Moving Opel upmarket didn’t work out. What will happen next if Opel doesn’t turn to profitability in a few years? I can’t see it happen and GM can’t wait forever.
Moving Opel upmarket was only attempted when Chevrolet was launched; no wonder it didn’t work.
With Chevy out of the picture for good, Opel can move back to the mainstream, as they have been for over 100 years.