How Opel Plans To Return To Profitability
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It’s not secret to GM Authority readers that Opel has had issues. We’ve documented the changes that have been implemented over the past few years, such as the impending closing of the Bochum plant. Now that that the company is leaner and better poised for action, we’re learning more how Opel plans to return to profitability.
According to Automotive News, Opel plans for profitability include increasing its European market share via focusing on smaller cars and by using more components from its parent, General Motors. “To be really profitable you need to use a global platform,” says CEO Karl-Thomas Neumann, explaining that this was Opel’s way of achieving economies of scale in the global environment. Opel in the past has been between a rock and a hard place due to “GM’s desire for global economies of scale, and Opel’s demands to cater for the local market,” among other issues.
Opel’s current market share in Europe is 5.8 percent but has the goal of reaching 8 percent (including UK cousin Vauxhall) by 2022. To achieve this, Opel plans on launching 27 new models and 17 new engines between now and 2018, much of it by making greater use of the technologies General Motors has to offer.
In April 2013, General Motors renewed a commitment to Opel by pledging to invest $5.2 billion by the end of 2016 to support new models. This can be seen by recent shared development costs between Opel and Buick. “The next generation Corsa will have a General Motors platform,” Neumann said, which is a change from past production that relied on joint ventures to develop vehicles—for example, the present Corsa was developed with Fiat.
Since then, losses have also been cut in half. Adds Neumann, “I have a lot of confidence about achieving our interim goal [of achieving profitability by 2016] … For the company as a whole it is an opportunity to implement deep seated change. Currently the structures are being adapted to ensure that people can’t take short-cuts in the future.”
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Opel is my favorite GM division but I still question whether it will ever be more than a break even operation.
Sharing with Buick is fine, but will only impact a handful of models. As as a result, Opel will still be a land locked company responsible for a full range of products.
Opel’s best chance of survival involves sharing product with Chevy. A next generation Corsa or Astra hatch has no place at Buick but would be great moved through Chevy.
GM must accomplish similar scale as in order to earn Ford sized profits. Chevy needs great Opel products. This could be the ultimate win, win at GM.
Chevy can have Opel cars but GM should never offer Chevy (based) cars again in (Western-)Europe except some low budget entry level cars like the next Agila…
What I don’t understand…why can’t Buick offer a hatch, especially a hot hatch like the Astra GTC? Wouldn’t that be a great car to compete with Volkswagen in the US?
German–a hot hatch would be great in NA; unfortunately, Buick isn’t trying to compete with VW here as that would be Chevrolet’s job. I do think a modified Astra hatch (new front facade, ajusted sheet metal) would be sexy next to Cruze. I’ll say the same for Adam being a bad fit for Buick in the States.
I agree with you that Chevy should sell Opel vehicles & not the other way around outside of low cost offerings. I think Opel should, however, sell some Buick offerings and that these cars should be imported from the US due to the low volume of higher end halo-like cars. A Lacross and/or Omega based flagship would sell in small batches yet make Opel’s portfolio look great.
Small cars won’t save Opel, they’re not very profitable. However, I live in the US, so I don’t know anything about the European auto industry, so maybe small cars sell with more content in Europe than here.
Small cars are a booming segment in Europe. “Small” cars also includes cars like the next Astra or the Mokka beside cars like Corsa, Adam and the next gen Agila/Viva.
Opel will make sure that future small cars are filled with content to up transaction price. Adam will serve as the template.
C segment is the new D in Europe. Because of this, the larger next gen Astra sedan might actually pay of as a compromise option.
I think Opel should grab China’s Sail as an additional value brand, something to brand as pat of the “Viva Family”.
I love the idea of Opel a mega brand aiming at both Skoda and VW. The idea of one brand developing a sort of Sloan’s ladder is great in that, if successful, it eliminates the need for multiple brands and advertising budgets.
It’s true that small cars don’t make a profit, unless you sell a lot of them or they sell for a premium price. I’d guess GM will expand the Adam & possibly Viva/Agila model ranges (Adam Rocks etc) a modern day Belmont (rapidly expanding market) & Astra shooting brake?? How about a compact Combo to rival Mercedes Citizen Compact (the commercials make decent profits) or similar to Skoda Yeti/Yeti Outdoor a Mokka Outdoor based on the Trax (another booming segment) there are plenty of options & ideas some easier to introduce, some not so depending on if there’s sufficient demand & if it’s a viable option.
I’d still expect to see the larger cars continue Insignia sales are doing well & I wouldn’t mind betting there’s a case for a larger saloon above it. I would expect VXR8 to be replaced & also the rather long in the tooth Antara with a bigger SUV based on the Enclave giving GM a three tier SUV line up. I realise the Coupe market is small & fashion conscience (& some would possibly say the markets dead), but I’d also like to see a modern day Calibra too.
As promised here are the May sales figures for the UK in May
Best Selling Cars May 2014 2014 Year-to-date
1) Ford Fiesta 9,450 1) Ford Fiesta 58,940
2) VW Golf 7,134 2) Ford Focus 37,355
3) Vauxhall Corsa 6,536 3) Vauxhall Corsa 34,324
4) Ford Focus 5,824 4) VW Golf 31,596
5) Vauxhall Astra 5,035 5) Vauxhall Astra 26,062
6) Nissan Qashqai 4,144 6) Nissan Qashqai 20,834
7) Audi A3 3,886 7) VW Polo 20,834
8) VW Polo 3,607 8) Audi A3 19,223
9) Fiat 500 2,896 9) Fiat 500 17,509
10) Vauxhall Mokka 2,801 10) BMW 3 Series 16,246
Top 10 May 2014 % market 2014 Year-to-date % market % change
Car Manufacturers share Car Manufacturers share vs 2013
1) Ford 23,459 12.09% 1) Ford 144,178 13.61% +9.06%
2) Vauxhall 21,961 11.32% 2) Vauxhall 113,305 10.70% +5.14%
3) VW 19,151 9.87% 3) VW 92,012 8.69% +12.59%
4) Audi 13,534 6.98% 4) Audi 70,258 6.63% +14.52%
5) BMW 11,649 6.00% 5) BMW 70,258 5.67% +17.96%
6) Nissan 10,151 5.23% 6) Nissan 57,405 5.42% +12.43%
7) Mercedes Benz 10,131 5.22% 7) Mercedes Benz 52,666 4.97% +16.97%
8) Peugeot 8,066 4.16% 8) Peugeot 47,744 4.51% +2.97%
9) Toyota 7,644 3.94% 9) Toyota 42,214 3.99% +8.56%
10) Citroen 6,610 3.41% 10) Citroen 36,816 3.48% +2.56%