We just learned that General Motors is in talks to sell its European division, Opel, to French automaker PSA Peugeot Citroen. Though many are not in favor of the potential move, with some calling it short-sighted and foolish, I’d like to think that there is more to this particular development than initially meets the eye: could GM’s desire to sell Opel have the makings of bringing the Chevrolet brand back to Europe?
A Major Weakness
As it current stands, GM’s biggest, hairiest weakness is that it is the only major automaker without a global brand. Come to think of it, every other automaker — including Ford, Toyota, Honda, Hyundai, Kia, Volkswagen, Mazda and even tiny Subaru — has a global brand presence with the exception of The General. In fact, Chevrolet was just that for GM until the automaker decided to pull the plug on the brand’s presence in Europe at the end of 2013.
GM is the only major automaker without a global mainstream brandThe reasoning behind the move was the GM already had a mainstream brand in Europe in Opel that was performing relatively well, and therefore didn’t need another one in Chevrolet. In addition, Chevrolet needed to vastly improve its image in the region thanks to the short-sighted decision in the 1990s to import shoddily-engineered and terribly-made Daewoo vehicles into Europe as Chevrolets, after GM’s acquisition of the defunct Korean automaker. In addition, GM was also looking at costs associated with modernizing Chevy’s product lineup and making adjustments to the Chevy dealer network in the region. Collectively, the efforts would have necessitated an investment of roughly $3 billion, according to executives familiar with the matter.
Instead of taking the plunge, The General decided to pull the plug on Chevy in Europe. Currently, the brand only sells low-volume Camaro and Corvette in Europe while leaving mainstream vehicle segments to Opel and U.K.-only sister brand, Vauxhall.
A Change In Leadership
It’s worthy to note that the decision to pull the plug on Chevy’s presence in Europe’s mainstream segments was made under ex-CEO Dan Akerson, with ex Vice Chairman Steve Girsky being a heavy influencer. Girsky was also responsible for the partnership between GM and PSA to co-develop vehicles, a move that have since been described as a big mistake. A few days after the decision to pull the plug on Chevy Europe was made public, The General announced that Mary Barra would succeed Akerson as CEO.
Since taking over as GM’s top executive and later taking on the chairman position, Barra has been under the gun from investors, GM employees, and Wall Street alike to increase shareholder value. Though the company has reported decent financial performance and earnings results, it hasn’t shattered expectations in the investment arena.
So the question is, did GM’s strategy for Europe change under Barra’s leadership?
Theoretically-Speaking
Personally, I can see the following scenario playing out for The General in the European market: GM sells off Opel-Vauhall to PSA Peugeot Citroen, gaining billions in instant revenue as well as earning incremental revenue as it becomes a minority stockholder in PSA as part of the transaction.
By selling Opel-Vauxhall, GM will also rid itself of the prohibitively-high cost structure associated with Opel-Vauxhall manufacturing plants, which is the primary reason that the Opel division has not been profitable in over a decade. Closing plants is also not really a feasible option for GM, as Europe’s protectionist labor laws make doing so expensive to the point of being prohibitive. So by selling off its European arm, GM will effectively be able to wash its hands on the expensive, lagging division.
Having done that, GM can simply re-introduce Chevrolet into the European market, importing the vehicles from its South Korean manufacturing base while establishing a new dealer network for Chevy in Europe.
All In All
If GM does en up selling off Opel-Vauxhall, it will have significantly reduced its cost European structure by no longer owning any (or significantly fewer) plants in the region while also re-introducing Chevrolet as a truly global mainstream brand with high-quality vehicles like the Spark, Sonic and Trax on the low end of the spectrum, as well as the Bolt EV, new Cruze, Malibu and Equinox on the small and medium end.
The move will very likely result in significantly higher efficiencies across Europe that lead to minimized global costs, as well as improvements in financial performance in the short term, while also giving The General a pretty sizable and, more importantly, affordable opportunity to break Chevy into Europe’s mainstream segment in the long term. After all, Ford, Hyundai, Kia, VW and Toyota have show, it is significantly more efficient and advantageous to run a single global brand than two very separate, disparate ones.
That said, the move could present some problems, such as letting go of highly-valuable GM-Opel vehicle development, engineering, and design operations in Germany… though we’re certain that The General could negotiate to keep those that part of the operation for itself.
Comments
That could work in all honesty. South Korea is a great base for RHD vehicles for the AP markets of Australia, NZ, Japan, Korea, Singapore, Thailand & Pacific Island nations. The issue in Australia/NZ is the loss of the “large car” Commodore. If Holden branded Opel Insignia’s are to become GM’s “large car” in Australia & NZ, what large 4 door, RWD, RHD with a V6 petrol engine replaces it? I’m sure there are American equivalents, but nothing ex-Korea comes to mind. A Malibu is about as close as it gets, but that’s really just a medium saloon over here.
But is Holden truly losing a “large car” with the new Insignia-based Commodore? The new vehicle appears to be slightly smaller from an exterior dimensions standpoint, but actually appears to have the same and in some cases more space on the inside.
Hence, it is truly necessary to have a RWD “large car” in the mainstream segment when the masses have made the shift from RWD-based large cars such as the Commodore and Falcon to FWD-based midsize+ cars like the Camry/Aurion, Mondeo, etc.?
In fact, GM’s North American lineup has nothing mainstream midsize or mainstream full-size that’s RWD; Cadillac is the only exception… but that’s significantly more up-market.
Holden has lost the “large car” market in many respects. The Opel replacement is physically similar in external dimensions only. Leg room, door portals and headroom have all shrunk from the 2017 VF2 Commodore sedan to the proposed 2018 Opel-sourced Commodore. Only the market can decide if this new strategy is fair. Certainly fleet buyers will have options here with the Opel/Daewoo product, but the Japanese equivalents will just compete more keenly now that they smell blood.
There is a large V8 petrolhead culture in Australasia that will sadly miss the cheaper Aussie made RWD V8 sedans (both Commodore & Falcon). Take a look online at SummerNats30 to see the smoke-fest 🙂
We are already looking to Toyota and Nissan for replacement V6 RWDs since the Holden/Opel replacement is moving to FWD.
“South Korea is a great base for RHD vehicles for the AP markets of…… Korea….”
Korea is a LHD country.
My bad…how did that sneak in there 😉
S.Koreans have the metric system was what i meant to say……………
As a Buick owner I’m confused. Buick has the rep for reliability whereas Chevy is playing catch up. Buick is essentially Opel. That hot selling Encore is thanks to Opel. So am I missing something or is there a shot in the foot afoot with this notion?
Doesn’t that mean GM has two “luxury” brands in the US: Cadillac and Buick? Very confusing strategy if you ask me. Toyota has Lexus, Nissan has Infiniti. Too much confusion & brand cannabilisation within the GM group.
Chevy, Buick/GMC, Cadillac = Good, Better, Best
Couldn’t be simpler
You’re right, if I were at the head of GM would try to also sell Buick, or perhaps suppress it since I do not think it’s so popular as Cadillac to have buyers for her.
Cadillac and Buick target different buyers: RWD vs FWD, think of BMW vs Lexus or Lincoln.
The era of the GM buyer is over! Cadillac and Buick are separate brands each aiding the company gain luxury share.
Cannibization it’s a myth as Hyundai and Kia demonstrate.
That’s precisely what GM is doing. Surely many of us thought that when they chose Chevrolet sponsorship for the Manchester United jersey. In England you can choose very similar cars from Chevy, Vauxhall, and Opel. With Holden becoming history in Australia, it is tome for the bowtie to be GM’s global brand.
No. Holden is not history, just locally manufactured Holdens which were the Commodore and the Cruze. Holden will still rebadge 2018 Opel & Daewoo products with the Holden brand.
I won’t be surprised if Holden’s name as a marque are numbered. What is the name protecting, 8% market share?
Market share is only one measure and a weak one at that. It doesn’t matter if a company has only one percent market share so long as the share is profitable – this is how capitalism works.
I don’t foresee the Holden brand dying anytime soon, unless GM does indeed move to a single worldwide brand (ie. Chevy) strategy, with perhaps a luxury brand in support (ie. Cadillac).
I’d say it’s really time. Chevrolet has to compete with one arm tied behind it’s back to make room for Buick. Years ago, you could match Chevrolet for Ford in nearly everything. Not anymore. Chevrolet now has trouble matching not only Ford but many other rivals. It’s burdensome to Chevrolet and IMO has been doing damage to the company/brand and it’s image for quite some time. No top end trims or options like Ford, no AWD like Ford, lot’s of things that have boosted Ford’s image that Chevrolet simply has been unable to capitalize on because of Buick. It also drags Cadillac down. Global Chevrolet/One Chevrolet should have been implemented during the BK restructuring.. They just were unable to sell Opel back then.
No matter what Chevy will need to become global and it will take time and monetary to do so. It wi not be easy.
Opel, Buick , vauxhall and Holden is closer to this already but due to Germany losing money for Opel.
Europe is a tough market for an outside corporation and that is what GM is even with Opel.
The deal with Opel is just to Break the labor cost and goverment isssues in Germany.
The real talk to make GM more profitable is to break it up into groups of smaller companies to drive up stock. I am not sure that is going to happen.
I wouldn’t characterize Europe as a “tough market for an outside corporation”. I would characterize it as a tough market for automakers with a huge and antiquated local manufacturing footprint. The distinction is vital in the developments seen here.
Hyundai, Kia, Mazda, and to some extent Lexus are having success in the market despite being outsiders. Besides of Chevy, they are really the only ones who have really tried to give it a go… and I would not go so far as to say that GM gave Chevy a fair go in Europe… but more like a half… err 10%-baked effort. In all, it is possible to enter Europe and have some success.
But this isn’t about sales volume… it’s about profitability. It will remain highly difficult for GM to break even let alone turn a profit in Europe with its massive manufacturing footprint there, which is highly expensive to operate. By contrast, if all Opels (or, say, Chevrolets) were imported from Korea (or even from, say, from Russia), then it would be highly profitable even at 30% of GM’s current sales volume in Europe.
The steps for success could look somewhat like this:
1. Sell of Opel and, more importantly, get rid of most if not all of GM’s current manufacturing footprint across Europe, thereby significantly lowering the break-even point
2. Pocket some money from the sale, as it will come in handy later on (specifically, in #5, below)
3. Keep Opel R&D staff and/or R&D facilities to work on future Chevy, Buick-GMC and Cadillac product
4. Introduce Chevrolet into Europe and import the vehicles (either mostly or entirely) from GM’s already-established Korean manufacturing base
5. Invest the funds earned in step #2 into repairing/developing the Chevy brand across Europe
What you get are:
1. An additional 20,000-60,000 sales per month from Chevrolet across Europe, without much/any local European manufacturing overhead (read: highly profitable)
2. A profitable GM Europe at a significantly reduced complexity and cost
3. A truly global mainstream brand, like your competitors at Ford, Toyota, Hyundai, Kia, VW, etc.
Let me rephrase it is a tough market for any MFG but for one not based in the Euro Union even tougher.
I see there is another story and it fits with one I saw two days ago about breaking GM into smaller companies all independent but working together.
The idea of this was to drive profits and also let the technology be driven to where it could be sold or leased to make more money by driving up stocks.
The idea was to have a technical company that also builds cars.
When I say breaking GM into smaller companies I do not just mean car companies but like into an electric division that could market electric drive system that could be sold to other companies.
It would not be much unlike Tesla and Space X as they are related but each is on their own. Opel would be like the joint battery plant.
Not sure if I like that but I can see that is has potential of driving values up as they are stagnate now just as an auto company.
But I agree doing nothing in Europe is not an option. They will have to do something sooner than later. Letting Opel fail is not going to work like the bail out here as Germany will not touch them. Selling is not an total option but selling part of them is viable.
I still think the deal is one where they can let PSA take the lead and let them get more done with the political. labor aspect. Then that will let GM have the breaks they need to make money. After PSA makes money on the deal GM may keep the deal the same or have the option to re acquire the part they sold.
Heck they could come in and buy PSA again.
The only real risk is if some one comes in and buys PSA out from under GM.
I’m a marketing/branding person. This notion of re-introducing Chevy to Europe I’d bet would be as successful as re-introducing McDonalds to America. (Read: won’t fake a mucking difference because of how strongly the brand is already established.)
It’s really simple: is Opel a stronger brand in Europe than Chevy?
If YES: all notions of selling Opel and reintroducing Chevy are INSANE
If NO: you can talk about selling Opel
That’s it. You cannot mess with established brands. You can at best tweak them. There’s no GET OUT OF JAIL CARD for branding.
I see your point in so far as positioning Chevrolet like Kia. Sadly, I don’t think that EU will survive, and, as a result, economic nationalism will surge across the continent.
Opel product sold through other brands accounts for 12% of GM profits so how about letting licencing fees go to Opel as opposed to Deleware?
GM needs to close another plant. Spain is easier and cheaper than Germany. Maybe someone would buy the Spanish plant? In addition, like FCA, European plans should be used for more than Opel/Vauxhall production.
Lastly, GM should consider keeping Vauxhall and aligning the brand with Chevrolet. PSA does ok in the UK, and it’s probably more interested in Germany anyway.
GM plays a financial shell game with Opel with all the global licencing fees for platforms and cars like Regal and Excelle going to Deleware as opposed to Opel/GME.
With this said, a 250 m loss can hardly be considered a loss. Anyway, 250 million is a relatively small amount of money.
GM needed to be brutal like PSA with pant closings. Also, like PSA, GM could use some Euro capacity (especially Spain and Poland) for Chevrolet.
Chevrolet and Opel should have been aligned-not Buick and Opel. Buick should be partnering with Cadillac on most projects, and work on unique product for its small line up.
Opel, via Buick, Holden and (Chevy i.e., Sail) is responsible for 12% of profits which covers up to 1B in losses
If my memory serves me right, GM tried getting rid of Opel back in 2012 or 13. But the reason Chevy was pulled out of Europe in the first place was it did not catch on. Buyers there simply had no use for a car with a Chevy nameplate on it. So I don’t see chevy turning into a global brand. If anything, Buick should be introduced as the global brand.
I was fine with Barra as the CEO. As soon as GM went back to its old ways and combined the CEO and Chairman positions, I knew things were going to head down words. Most all company’s these days keep these separate and historically GM has done best when CEO and Chairman were separated. Where i am going with all this is I think this will hurt GM later on and I agree with Alex that Barra is getting desperate to bring the stock up and she will do this by cannibalizing GM little by little. Terrible.
My personal stance on it is such: GM’s current structure in Europe is simply not going to turn a profit. It has barely broken even (for what I believe has been only 2 quarters), despite the laser focus on bringing the division to profitability, including trimmings in manufacturing and on the corporate level.
As it relates to Opel: the brand has value, and the R&D operations perhaps have even more value. The anchor is the manufacturing footprint in Europe. As such, I truly believe that if GM could simply walk away from its manufacturing base in Europe while keeping the Opel brand and R&D ops, it would do so in a heartbeat. Unfortunately, things are not that easy. So, what GM will likely need to do to rid itself of the financial burden that is its European manufacturing base is sell the Opel brand along with it… while keeping some/most/all of the R&D base.
As for Chevrolet, it’s not a matter of European buyers having no use for it there… but rather very little *sustained* effort on the part of GM to sell the vehicles there; in fact, the same (but worse) goes for Cadillac up until 1-2 years ago. There was half of a serious effort in the 2012-2013 timeframe, but it was far too short-lived, with Akerson cutting funding and pulling operations, mostly thanks to Girsky’s short-term analysis. Neither are “car guys”, so it’s easy how they got lost in the analytical side of the business without understanding the industry at large. That was the cry of desperation, while Barra’s leadership appears to be making the very difficult decision to get rid of Opel for the purpose of short- AND long-term gains.
In all, as I have mentioned in my reply to V8 Jon below, Chevy has potential in Europe… and with enough money and a consistent effort, I like the chances of its success in the region.
The fact of the matter is that every major automaker must have a global mainstream brand… and for GM, Chevy is it. If Buick becomes a global premium brand down the road, then even better. But for now, bread and butter is where it’s at.
Alex,
Speaking strictly branding Chevy didn’t sell and won’t. (Not the cars, the brand.) Making Buick a global brand isn’t so hot either, even though Buick/Opel as a global brand makes perfect sense — SINCE — it already kinda is one.
Strictly branding I’d rebadge Buick/Opel as Global Vauxhall. Let Chevy and Cadillac be as American as Apple Pie. That’s okay.
“If my memory serves me right, GM tried getting rid of Opel back in 2012 or 13. But the reason Chevy was pulled out of Europe in the first place was it did not catch on. Buyers there simply had no use for a car with a Chevy nameplate on it. So I don’t see chevy turning into a global brand. If anything, Buick should be introduced as the global brand.”
THANK YOU
Fact is British people buy Vauxhall & Ford, Germans buy VW, Merc, Audi, BMW & Opel, French buy Peugoet, Citroen & Renault & Itailans buy Fiat. Europeans like to buy their own brands so as GM & Chevy have found out countless times before it’s not as simple as sell Chevys in Europe as a global brand & people will buy them, they won’t (one reason being what’s mentioned above) it’s a tough market to crack & people like what they like.
What you say about Europeans buying the brands you listed has historically been true. But somehow, Hyundai and Kia have managed to make a decent run in Europe with global vehicles sold in the U.S, along with other markets. And if Hyundai can do it, then there is no reason that GM can’t do the same with Chevy.
In fact, there are a lot of similarities between Kia/Hyundai and Chevrolet: both develop their vehicles for global, mass-market consumption, and both have faced a significant amount of headwind in the European market. The difference is that Hyundai and Kia have had a consistent, long-term strategy in 1) offering relatively decent vehicles in Europe, 2) having fairly effective (and at times creative) marketing and 3) consistently developing their retail channels to deliver notable retail customer satisfaction scores. GM has not had the same with Chevrolet on any of the three levels.
So, with 1) decent product, 2) good/better marketing, and 3) a laser focus on developing the retail channel, I believe GM can do the same with Chevy. It won’t be overnight and it won’t be cheap… but it will likely be significantly more lucrative to the bottom line.
Hyundai & Kia have sold some models in Europe but have yet to make a impact, remember they are sold mainly on price & in desirability study’s they are ranked bottom. Also they have both got to conquer second time buyers (it remains to be seen if they find any loyal buyers), finally when they’ve payed out on the long warrantys their future model range will thin as a result.
Here’s your answer as to why GM can’t do it as well as Hyundai and Kia – Hyundai and Kia make better cars. When GM tried with Chevy they were selling rebadged Daewoos which were of horrible quality.
Yes, but Chevy makes much better cars now that the Daewoo-based product has long been discontinued. The trust can be regained… I think it’s worth it.
Economic nationalism plays a huge role in Europe. I’d even argue that Opel being GM hurts German sales to a certain extent.
Turning Opel into to a JV might be beneficial if, and only if, the new alliance has the will to close addition plants–Poland has weak labor laws as does Spain. I do not think GM should ever completly let go. Maybe GM and PSA could form an alliance like Renault?
Most of Opel/Vauxhall profits are going to the USA in form of licence fees for the products and patents developed in the Opel development center in Rüsselsheim. But they are recorded in the books on the cost side, and not on the income side.
The whole idea that Chevrolet can be just re-introduced into Europe is fairy tale thinking. The withdrawal of the brand in Europe left owners of Chevrolet models high & dry and some very bad feelings that will not be forgiven for many, many, years into the future. Also in general Chevrolet models are not competitive with other rivals. Whole idea is a non starter.
I believe GM has excess capacity in Korea, and a strong union that isn’t interested in shrinking. The extra volume a reintroduction of Chevrolet to Europe for it’s Korean operations could make the incremental costs even smaller.
If they play a Chevrolet reintroduction to Europe as a long play, as Mary Barra seems inclined to do, they could be successful.
Also, I do assume there will be some non-competes with this transaction that could limit GM’s options.
Finally, I expect this move by GM for so long.
I am convinced that if he can sell Opel and Vauxhall to PSA Group, GM will have more platforms and technologies to deploy the Cadillac, Buick and Chevrolet.
Chevrolet to use as a generalist brand, Buick and Cadillac as premium brands.
I think GM should enter only Cadillac as a luxury brand for the European market, will remove many customers in BMW, Audi, Mercedes, Lexus, Jaguar.
I’m European. I almost stop reading this article reaching the statement :”mainstream brand with high-quality vehicles like the Spark, Sonic …..” Alex, I’m sorry, but you really don’t understand European market. The cost of re-introducing Chevy vehicles there, building dealership from zero would be really HUGE. And keeping Manchester sponsorship is not enough to do this….
Hyundai/Kia builds vehicles dedicated to the European markets. Hard to say the same about Chevy lineup today. Well, maybe with an exemption which is Trax
If GM sell off Vauxhall & Opel it will be the end for GM too
But what about Buick at this point? I mean right now the Buick lineup does contain some Opel-vauxhall lineup. Or is Buick going to have its own design language once the Opel is being sold to PSA?
Chevy is not up to the quality nor does it have the styling and interiors to match Opel. chevy is plain jane always was always will be. The lights are on at GM but nobody is home.
Couldn’t agree more Steve. Chevrolet has no chance of getting back into Europe and Cadillac has had more European re-launches than North Korea has had missile tests
that what i m listening germans buy german cars and france france cars and so one thats so stuped story. europeans not think so like some other country think like US. Us cars and other cars is veird. Eurpeans know that US cars is so different language but today is us cars more global and people buy them more european to. or they buy who wants to be more different like other.
somewhere i read what happening Opel ampera – thats no problem, france have electric cars to and they build they tomorrow to.
everybody have chance go new market . whent they really want. not easy to survive eu market becauce level is so higth. everybody wants to be best
I have to disagree with you Alex. 67% of Honda automobiles sold world-wide are sold in the U.S. and 80% for Subaru. You will not find Subarus in China, the world’s largest market, because they do not sell them there. During my recent travels in S.E. Asia, I’ve seen thousands of Toyotas and Isuzus, some Hondas, some Chevys, some Fords, 2 Subarus, a couple of Saabs, 1 Citroen, and 1 Open Reckford.
And you’ll find hardly any Subarus or Hondas in S.A. or Europe, either. Those 2 are not global brands, they’re regional brands with their regions being Japan and N.A.
Joe, in fact Subaru is niche brand in Europe but you are absolutelly wrong saying the same about Honda
Precise numbers for Germany, per January 1st, 2016:
There were 45,071,209 cars registered as passenger cars in Germany, out of which 21.6% were branded VW, second comes Opel with 10.4%, third Mercedes with 9.4%, then Ford with 7.4%, fifth and sixth Audi and BMW with 6.9% and 6.8% respectively.
All other brands are less then 5% each.
Honda 1.1%, Subaru is not listed in that table of percentages by selected brands, but is listed in another table with 123’587 units, which corresponds to 0.00274% of the total.
Chevrolet 258,760, which are mostly orignal and rebranded Daweoo cars. Daewoo/Chevrolet sold a lot in 2009 due to the “cash for clunkers” program of the German government, because the Daewoo were among the cheapest new cars together with Dacia.
Besides, Honda has a factory in Great Britain and one in Turkey.
Looking at 2015 UK car sales (cannot find any more recent) has Vauxhall as 269, 766 sold compared with Citroen 80012, DS 8614, Peugoet 104249 also Honda 53417 & Subaru 3455. That puts Vauxhall more than 20000 in front of Peugeot, Citroen, DS, Honda & Subaru combined.
You describe the situation in Britain. The overall European situation is the reverse. There you find more PSA cars being sold than Opel/Vauxhall.
Have a look at the ACEA site:
http ://www .acea.be /statistics/tag/category/by-manufacturer-registrations
My opinion of Opel and Vauxhaul is that GM needs to get rid of them and then start new with manufacturing in low cost countries for commuter vehicles and then import icon vehicles, such as Camaro, Corvette, and Cadillacs from other manufacturing such as the U.S. and China. These vehicles can be sold under the Chevrolet or Cadillac umbrellas.
Unfortunately Chevrolet cars just aren’t up to scratch to do anything in the European market. The styling and particularly the interiors scream cheap and cheerful and will not be able to compete with the high quality interiors of VW. Opel interiors are streets ahead. Just look at the mess of the Opel Ampera E and compare it with other Opel brands to see the difference.
Also, unless car importing is including in the EU South Korea trade deal every Chevrolet GM imports into Europe will have a 10% tariff slapped on them making them uncompetitive over night.
“high quality” interiors of the VW?
sure man, ok.
It’s impossible to overstate the barriers to establishing Chevrolet as a contender in the European market.
Mention Chevrolet to most people in Europe and they don’t think Camaro; they think a badge engineered Daewoo way past its sell-by date. Even if they were to think Camaro, they’d picture a car that handles poorly and is utterly impractical, as anything other than a track day special in most European countries. And they’ll remember Chevrolet as a brand that left its owners with cars that were effectively worthless after the brand exited the European market.
Another issue is that the cars have clearly not been designed with the European market in mind. Hardly surprising, since they don’t sell them here. But take a look at the Vauxhall Viva / Opel Karl and it’s sibling the Chevrolet Spark. Both are built in South Korea, but clearly a lot of money was spent transforming the Spark into the Viva / Karl. And even then, the resulting product is still far from class leading in UK and European terms. To make Chevrolet in anyway credible, the same and more would need to be done for every model in the Chevrolet range – which would cost billions. And after you’d spent that money, the EU would then slap on a 10% import duty, which at a stroke would render the range uncompetitive in a market characterised by oversupply and horribly low margins within the mainstream sector.
Then there’s the issue of range. A quick look at the Chevrolet website suggests there are just Spark, Sonic, Cruze, Malibu, Trax, Equinox and Colorado that would even have limited potential in the UK and EU. Plus of course the Volt and Bolt. The rest are either too big, too thirsty, too impractical or downright irrelevant, which would leave significant gaps in the range.
And finally, there’s the badge. Chevrolet is Americana wrote large. It’s perceived as the automotive equivalent of Hershey’s, Wendy’s, Fox News, Lucky Strike, Zenith and Betty Crocker. Now here in the UK, that’s neither an advantage nor a disadvantage – it’s just a statement of fact. I love US cars and love the USA in general. I grew up listening to Johnny Cash and Marty Robbins, hearing tales of Davy Crockett and The Alamo and regarded Steve McQueen as the epitome of cool. We feel quite close to American culture – we share a common language, a common worldview and we know when the excrement hits the turbine, we’ll both look out for one another. But that’s atypical of many EU countries. Many EU countries are actually pretty hostile to pretty much anything American. And that could be the biggest barrier to any Chevrolet comeback.
Now you might say, well look at Ford? And you’d be right. But in Europe, Ford is pretty much regarded as a European brand. And rightly so – since they’ve invested billions in Europe over the past century. Indeed, even though Ford no longer produce a single car here in the UK, they still employ tens of thousands producing engines, components and in R&D. Indeed to highlight just how ‘European’ they are, elsewhere in the Republic of Ireland Ford have previously marketed the Focus as ‘Ireland’s best selling German car’.
I really hope this doesn’t sound anti-GM, anti-American or anti-Chevrolet. It’s certainly not meant to be. I don’t blame GM for Opel Group’s woes, which are very much made in Germany and not in Detroit (nor indeed in Luton or Ellesmere Port). But hopefully these comments do get across just how excruciatingly difficult and expensive it would be for Chevrolet to succeed… and that’s before the small matters of product homologation, distribution and dealer support are considered.
From Bloomberg – “The U.S. company is considering exiting Europe, where it’s lost $9.1 billion since 2009, hurt by a high cost base and pricing pressure.”
Just imagine if GM had spent $9.1 bn on new, modern, manufacturing facilities (in a relatively low labor cost country, say, Poland or one of the developing Eastern European countries), established a Euro-centric design centre, established key lead dealerships across most European major cities, and marketed the hell out of their new product?
I’m sure if I had $9.1 bn to play with I could “do it” in 8 years – just look at what Elon Musk has done with EVs.
To all in favor of this deal, could we have a community question on “Do you feel GM should drop from being the world’s 3rd car manufacturer to being the 6th?”, or “Do you agree the majority of Buicks should be Chinese-engineered rather than German-engineered?”. Because these are just 2 of many negative consequences if this deal goes through.
I think Chevy, Buick and Cadillacs will have no problem selling once this deal with PSA goes threw. It will take GM a few years to get the model line up for each division to be competitive in Europe. It will happen slowly gaining sells each year, as long as GM is profitable in Europe then it’s a win win for GM!
Is GM thinking of doing the same in Australia by selling off Holden and bringing Chevy, Buick and Cadillac down under?
I would like to see all 3 divisions become a global brand.
I personally excited about the Regal (Opel) coming to the states. I plan on buying one as soon as they arrive as long as they look and drive as expected. All the reports from the magazines have nothing but good to say about the new Regal Sportback.
I would like GM Authority to step up and do a report on the new Regal Sportback. I especially would like to hear how long it takes to get one after placing a order.