Facts, Figures, And Intricacies Regarding GM’s Decision To Withdraw Chevrolet From Europe66
As General Motors’ decision to discontinue offering mainstream Chevrolet vehicles in Europe begins to settle, some facts and numbers are beginning to emerge surrounding the decision.
For starters, the development marks a sharp reversal in GM’s global Chevrolet strategy, where The Bow Tie brand was meant to be The General’s globally-available volume brand. It is worth noting that Chevrolet won’t disappear from Europe entirely, as it will continue selling cars like the Corvette:
“For Chevrolet, it will allow us to focus our investments where the opportunity for growth is greatest”, said GM CEO Dan Akerson.
Even then, Chevy’s sales volume is likely to diminish even further from the already-minuscule sales numbers it has been posting in Europe before the announcement. Even so, Chevrolet’s withdrawal will not affect GM’s plans to break even in Europe by mid-decade. Sadly, however, GM has posted losses in Europe every year so far this century, including $499 million in the period from January 2013 to September 2013, an improvement from the $1.2 billion lost during the same time period in 2012.
Pulling Chevrolet out of Europe will result in the automaker recording net special charges between $700 million and $1 billion in the fourth quarter of 2013, with the amounts including a $300 million in non-cash charges. In addition, GM mentioned that it will “incur restructuring costs related to these actions” that will reduce the earnings of its International Operations (GMIO) unit in 2014. Given that GM Korea is part of GMIO, something tells us that GM Korea will be negatively impacted.
Illustrating the disparity between Opel-Vauxhall and Chevrolet in the region are the following sales numbers: Chevrolet sales in Europe fell 18 percent through October 2013 to 121,621 units, while Opel-Vauxhall sales dropped 3 percent to 702,481 units. According to GM, the reason behind GM’s decision to drop Chevy in Europe is that it competed directly with Opel-Vauxhall in the mainstream segment.
By removing Chevrolet, GM supposedly clears the way for Opel to be more successful. However, there is an argument to be made that the paltry 121,621 Chevy sales in Europe didn’t prevent Opel from being successful in the first place, and that by dropping mainstream models from the Chevy lineup in Europe, GM will lose (most of) those sales to the competition.
Notably, the greater majority of Chevrolets sold in Europe are built in GM’s plants in South Korea — an area where General Motors has been in active (and sometimes non-fortuitous) negotiations with unions. Given that Chevys built in Korea will no longer be exported to Europe, GM will likely need to trim Korean production output, but the automaker has yet to comment on whether it plans on closing any plants, or making changes to production shifts, as a result.
GM did, however, say in a news release that it would “increase its focus on driving profitability, managing costs and maximizing sales opportunities in its Korean operations as the company looks for new ways to improve business results in the fast-changing and highly competitive global business environment.”
And now for some irony: GM will continue selling Chevrolet vehicles alongside Opels in Russia. That’s because both Opel and Chevrolet brands are strong in the country, and are seen as distinctly separate with their own intrinsic values.
Some more irony: GM will continue its seven-year $600 million sponsorship agreement with European soccer club Manchester United to promote Chevrolet. Supposedly, this is thanks to the team’s strong following in the Chinese market, where Chevy is attempting to grow sales. The biggest part of the sponsorship will come in a year, as the Chevrolet logo will be featured on the Manchester United shirts for the 2014/2015 season.
The GM Authority Take
GM has tried to succeed in Europe by offering both, Opel-Vauxhall and Chevrolet. In doing so, it hasn’t necessarily failed, but it didn’t achieve stellar success, either, likely thanks to the terrible reputation GM bestowed upon Chevrolet in the region by selling rebadged Daewoos in the 90s and early 2000s.
All that is to say, let’s see if The General will be able to succeed in Europe with just Opel-Vauxhall… and Cadillac, of course.
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Chevrolet is a volume brand and Opel was moved to a more luxurious segment as Buick. GM should let Chevy in Europe and do more advertising especially to proof that its cars are the best in category. Chevy should be sold everywhere.
Yes and make the popular cars (like Cruze , Spark and Aveo) in Poland or Germany so customers don’t have to wait for 6 month after the new car they ordered.
Oh no lets not let the facts get in the way here. It may just point out the truth to what happened. And many just can’t handle the truth.
The point is , it will not save Opel , and customers like me don’t gone buy an other GM car anymore in the future…
Now Vauxhall and opel zero excuses! They need to make a profit! If they don’t then maybe GM is planning on doing to opel and Vauxhall what they are doing to holden taking away their factories and then their brands and replacing them with another GM brand!
Something has got to change GM can not continue to lose money in Europe and Australia, they are fixing the problem in Australia now we have to wait to see if Europe has to be fixed
“Opel was moved to a more luxurious segment as Buick.”
No that’s simply wrong…
Opel will still be able to be more like Buick with some models but they will also be able to sell the lower end cars that are cheaper too.
VW has used this approach as they can sell a gutted down Golf Cheap or even their off brands like Seat but still offer higher end cars like Phaeton.
GM can closely model Opel after this but they need to take care to learn from the mistakes VW made. Also sharing the higher end models with Buick and China it will take some of the burden of development cost off of them.
See this is where changing Opel was difficult as they were changing the entire company and line up. In Holden’s case you are only changing some trim and name in a more open thinking market.
Too many focus on the big things when it all comes down to the details and money.
I think that GM should immediately announce that they will continue selling big Chevys in Europe.
Well they still will sell the Camaro’s and Corvette’s to the one’s that can afford them , even if I had the money to buy one I could not cover the Co2 taxes and annual road taxes and I don’t even mention the gas prices ….
Yes this measure alone will not save Opel. But it’s one important peace of the puzzle which will lead to sucess and profitability:
Opel’s image and brand identity will no longer suffer because of the low-quality Chevy lineup. People will no longer think that GM plans to replace Opel by Chevy one day. They will no longer wonder why buying an Opel if they can have a similar Chevy for the lower price. People understand now that Opel has full support of GM. The Chevy retreat will strengh the perception of Opel’s importance in Europe. And last but not least there is lower cannibalization, so perhaps some people who bought Chevy will now buy an Opel instead…not many for sure but enough.
Another point: the Chevy distribution in Europe was not profitable, so the retreat of Chevy can help to break even sooner.
If you prefer a Cruze instead of an Astra, well it’s your personal choice but tests and quality reports show that Cruze can’t compete with Astra.
Let me guess you are a German ? That says enough ..
sorry to say this but lots of other European country’s are tired of the German domination in Europe so the brand and Image of Opel as a German quality car does not work in the same way it does with Volkswagen Audi or Mercedes…
Opel is desperately busy with selling the stock cars at dumping prices cheaper than Chevrolet over here in Belgium and it does not work , btw a Chevrolet/Opel dealer told me customers who went to his showroom with the thought of buying an Opel leaved the showroom with an Chevrolet , just because the cars look better and bowtie has more appeal than the Opel badge , the only reason that some customers would not go for Chevrolet is the delivery time that takes up to 6 months… , about quality I never heard a Chevrolet driver complaining , I can’t say that about Opel.
@Astra now is not any worse than Cruze but it certainly is not better. Chevrolet never had any quality problems like Opel so I think that it was Opel that was a burden for Chevrolet.
Well comparing the Astra to the Cruze is like comparing a Verano to a Cruze.
Much of each car carries similar parts but with the Buick you pay more so you get more and better parts. Same with Opel. Comparing Chevy to Opel is Apples to Oranges as both are fruit but they are from different trees. One may also cost you more since it is not local.
GM is better off trying to sell a Opel for the price range to compete with VW and meet them in low and high segments. They can discontent cars to lower the price as VW does.
What works in the states will not work in Europe or likewise. They need to see how they can consolidate what they have to better fit the market there. Chevy was a square peg in a round hole there during a difficult time to sell cars in Europe. There is a lot of competition there now for a limited amount of buyers.
In fact there is no price difference between Cruze and Astra. And there is little difference between the cars either. In Germany Cruze SW 1.4 T LTZ 103 kW is 23090 € and Astra SW 1.4 T Energy is 23455.-. Prices are about the same everywhere in Europe. After driving both cars it was really easy to choose Cruze. I just liked it better.
yes ,thats a fact !!!! I believe you for 200%…
Yes and that’s the reason why Opel has a 7 percent market share in Belgium and Chevy one percent! Come on… People have to wait for an Opel Mokka also more than six months but this car was ordered more than 150.000 times within 14 months…nearly the same number of all Chevy sales in entire Europe…
The advertisements that they do for selling the Opel are 500 times more than that they ever have done for Chevrolet .They almost give the stock cars away for free thats why they get a bigger market share in Holland and Belgium , not because of the image of Opel . Chevrolet does a 1 % with mouth to mouth advertisements thats far more better than Opel can dream of .
I don’t think that Chevrolet (the Korean import ones, that is) actually have achieved a market position where their sales could cannibalize Opel sales.
Let me quote again from this September 18 Automotive News article by Mike Colias claiming that GM execs differ on the overlap of Chevrolet and Opel in Europe reporting from the IAA 2013 (aka Frankfurt Motor Show):
Thomas Sedran, a former corporate restructuring consultant who this summer replaced Susan Docherty as head of Chevrolet Europe, says there’s minimal cross-shopping between Chevrolet and Opel, even though both are seen as mainstream value marques in Europe.
“We see very little interaction between these two brands,” Sedran told reporters at the auto show here last week.
He said research shows that only 5 percent to 12 percent of Chevrolet buyers also considered Opel among their top three choices. The same low degree of cross-shopping applies to Opel buyers, Sedran said.
Unfortunately we do not learn which other brands those questioned actually had as their top three choices.
I guess that for the Chevrolet buyers, the other choices were Dacia, Kia, and Skoda, and for the Opel buyers VW, Ford and Renault.
I think that GM made a big blunder by introducing the Chevrolet brand in Europe as just another name for a bargain basement cheapo Korean import brand, thus impregnating people’s minds with this brand image, and I believe that the recent dramatic reductions in sales were due to GM Korea’s (not a 100%-subsidiary of GM) efforts to push their cars into a mainstream market segment with higher prices, thus pushing their traditional market base to the much more successfull competitor Dacia (by Renault) which had dramatic increases in sales in the past years: cheap, no frills cars, with a known and trusted big manufacturer behind, i.e. Renault.
One has only to consider that the base price for a (Korean) Chevy Malibu is 30’000 Euro, while an Opel Insignia can be had starting with 24’130 €, nearly one fifth less (prices for Germany, quoted from the respective web site).
Will please explain why it matters where these cars originated?
So I get the impression that you would say no to these chevys even without looking or driving them!
If this is case then explain why? Should you worry more about how well the car is rather then where it’s from!
Chevrolet buyers could have bought some other car in the same class, like Opel, Ford, VW etc. East European cars like Dacia or Skoda are not an option for most Chevrolet or VW or Opel buyers.
Opel Mokka is a rebadged Chevrolet Trax, manufactured by GM Korea. A quality product like all Chevrolets.
reply back to gm1562:
Well, European Chevrolet-Buyers could also have bought a Bentley or Rolls-Royce, if they would have the funds, or travel to the moon. Why not? Those are cars, and have four wheels, too.
What you write is the same level of irrelevant pure fantasy. What makes you think that anybody looking for a cheapo Korean import car like a Daewoo, even if just given another name, would consider a VW or Opel or Ford or Renault or Toyota, as alternative in the same price/value category? Please explain!
Finally get the fact that Chevrolet was introduced in Europe as just another name of that cheapo bargain basement Korean import brand, while every other thing remained the same: the same company, the same cars coming from the same Korean factories, the same dealers with the same service, the same price/value relation, and the same image, which was just transferred to another name.
What do you expect of a brand with such an image?
Get out of your dream world and into reality!
As to the relationship of Trax/Tracker and Mokka/Encore: the fact that the Trax was introduced in the market at least half a year after Mokka/Encore suggests rather the opposite: that the Trax is a copy of the Mokka. Actually they differ more than just by a changed badge; the sheet metal is completely different, with the possible exception of the front door. Sure, the differences are too small; at GM DAT/GM Korea they seem to be unable to develop two really different cars on the same platform. Same problem with Opel Antara and Chevrolet Captiva.
The only segment that the brands have competed in is the B class – Corsa and Aveo ( Sonic). I the C segment Cruze was consedered to be a budget model ( on par with Dacia ). This is the reason why most Chevy owners won`t consider buying Opel and they wil probably flock to Dacia/Skoda and some offerings from PSA. In Poland Chevy closed the top ten on the sales charts in 2013( as of November 30 ) but with Opel GM was on the third place. Seriously I see plenty of Chevys. I hope we at least get the next Cruze under Opel Asta name.
one more to gm1562:
You seem to think that GM, by giving Daewoo another name, transferred the image which the Chevrolet brand has earned in a century of strong presence in the USofA, by some mythical spiritual act to that bargain-basement cheapo Korean import brand in Europe, completely effacing Daewoo’s original brand perception.
The opposite happened: the image of the Daewoo brand in Europe was just transferred to Chevrolet, because in 2005 they simply changed the name with leaving everything else unchanged.
BTW, Daewoo is present in Europe since 1995, and changed its name to Chevrolet in 2005.
I think that the price/value relationship of the later Korean Daewoo-Chevrolets increased with the new products, especially the Cruze (which was built on the Astra platform developed in Germany), but that change went, methinks, largely unnoticed by the general public. As often, the first impression counts.
I think that GM made another big blunder in their brand strategy by renaming Daewoo to Chevrolet.
So in your logic they are selling Deawoo’s in the States , the Cruze is one of GM’s best selling cars in the States , I don’t think if they would sell it under the name Opel or even Deawoo in the States they would sell allot of them.
Even in Asia the name Deawoo is not used anymore they are all Chevrolet’s .
@Lucas I would never buy a Cruze under the name Opel ….
Did I hurt your feelings with pure facts? I’m so sorry.
Chevrolets in Europe are the same models as in the U.S.
Spark is Spark
Aveo is Sonic but the same car
Cruze is Cruze
Malibu is Malibu
Trax is Encore in the U.S. but Trax in Canada
Volt is Volt
They are exactly the same cars. U.S. Chevrolets have nothing to do with Daewoo, neither have Chevrolets in Europe.
You live in a different world than other people. By the way, first drive review, Chevrolet Trax 27.9.2012!
Chevy buyers are not interested in el cheapos in Europe or US. Rivals are VW, Opel etc. If there is no Cruze 2 available in Europe in 2016 I’ll probably buy a BMW.
So I’ll ask the q’s again, why are cars that sell in every region of the world not good enough for you people in Europe?
You Want Buy A Chevy Cruze A Car that sells thousands all over the world!