By on June 28, 2011

 

Talk about bad associations! Bloomberg reports that

General Motors Co.’s European Opel unit is introducing models with advanced options typically sold on luxury cars, seeking to revive a business that’s lost $14.5 billion since 1999.

The GM unit is working with AlixPartners LLP on how to tweak options packages or production plans to spur higher prices, said two people familiar with the matter. They are also studying ways to reduce engineering and manufacturing costs, said the people, who asked not to be identified disclosing private plans. Some new features include headlights tuned to high-speed driving on the Autobahn.

Which leads to one damning conclusion:

“They can’t price their cars like Audi or BMW,” said Thomas Stallkamp, principal of Collaborative Management LLC, a Naples, Florida-based consulting firm. Stallkamp, a former Chrysler Corp. president, was a partner at private-equity firm Ripplewood Holdings Inc. when it tried to buy Opel in 2009. “They’re like the Chrysler of Europe.”

Keep in mind, this isn’t just any old analyst… this is a guy who tried to buy Opel back when it was officially for sale. And though pricing issues in the face of rising costs are one Chrysler-like problem facing Opel, there’s another issue that may even be more troubling…

Like Chrysler, Opel’s got another huge problem: dependence on a single market. Just as Chrysler is stuck fighting for share of the shaky US market, Opel is, for all intents, stuck in a European market that seems to be going nowhere. Though its market share has been going up, it’s still a discount brand relative to its main competitor, VW… and the European market lost sales last year as it started to shake off a cash-for-clunker hangover. Meanwhile, the German market, which is recovering the strongest, has not been receptive to Opel recently, and analysts warn that the brand will have to look to less-attractive European markets like Italy and Spain for growth.

So where else is there for Opel to go? Good question. Though the brand is technically being sold in China, there’s no sign of its volume in GM’s sales reporting, meaning the numbers must be miniscule. Meanwhile, Opel must not only face in-house competition from Chevrolet, but possibly against its own overseas-built cars bearing Buick badges down the road. In short, GM is not only not expanding Opel to the new markets it needs to leverage its premium-ness that isn’t being appreciated in the European market, but it’s actively encroaching on the brand as well. And don’t forget the huge restructuring costs (GM is estimated to spend $11b on Opel through 2014) hanging over the European division as well.

And you thought Lancia was “the Chrysler of Europe”!

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34 Comments on “Analyst: Opel Is “The Chrysler Of Europe”...”


  • avatar
    Sinistermisterman

    Opel/Vauxhall – Premium? In the same sentence? Give me a break. They’re the Chevy’s of Europe, except they don’t sell as well, and most people consider them to be ‘lower class’ cars. There is a reason why in the UK the old Cavalier gets referred to as the ‘Chav-alier’. It’s down to the type of people who are associated with driving Vauxhalls. http://en.wikipedia.org/wiki/Chav
    Opel/Vauxhall “ain’t” Premium, as they say where I used to live.

    • 0 avatar
      Ooshley

      Funny thing is the Opel badge is launching here in Australia as a Premium GM product. For years the Opels re-badged as Holdens have been revered over the locally produced product and especially the later re-badged GM Daewoos (a brand so toxic it has been disappeared).

      This was made particularly clear with the 2005 debacle of the Holden Barina, shifting from 2 generations and 10 years Opel Corsa, to a Daewoo Kalos (Chevy Aveo). Which caused consternation in the local auto media after ANCAP (think Euro NCAP but a few years behind) downgraded it from a 4-star to 2-star safety rating.

      Branding is a funny old thing, and since we will likely only see the top flight and well-equipped models here, Opel is likely to remain Premium where I live.

  • avatar
    mike978

    Speaking from a UK perspective Vauxhall is at the same level as Ford. No mainstream brand touches VW, so Opel/Vauxhall are hardly unique in that.
    Opel has a problem in that Ford has established itself as the drivers car of mainstream makes (Focus specifically) whilst VW is more at the luxury/refinement end (Mk IV Golf really set that image). That leaves no niche for Vauxhall/Opel.

    Vauxhall’s cars have been improving with the Insignia, Astra and new Zafira all doing well or looking promising (Zafira not out yet). So I wouldn`t count them out. Also they have market share Toyota (4%) and Honda (1%) would kill for.

    Sharing with Buick is not encroaching on Opel since they are in different markets. Having Chevy in Europe could work out like Skoda/VW does, with Opel moving a little upmarket to allow space for Chevy.

    The text in the photo says why settle for 2nd best when you can have 6th and 7th best. If I am not mistaken Opel was the third largest seller in Europe. Not exactly bad when you consider the greater competition compared to the US (Peugeot/Citroen, Renualt, Fiat, Skoda/Seat – all unavailable in the US)

  • avatar
    Zykotec

    GM f***ed up again. Even as a Ford fan I can admit that Opel builds really good cars now compared to earlier. There is no practical reason Opel should not be able to sell as many cars as VW/Audi. Only image and marketing.

    • 0 avatar
      mike978

      Opel will never sell as many as VW. As stated VW is king and if they do not screw up they will stay King. Opel’s competition is everyone else and they do well being third overall. So they beat Peugeot/Citroen, Renault, Fiat etc. They are also close to Ford in European sales so GM hasn`t f***ed up as you so eloquently state (especially if you admit they build good cars now)

      • 0 avatar
        Zykotec

        Well, to a certain point I agree, but I still don’t think neither Ford or Opel build worse cars than VW. VW has managed to grab a similar position in the market that GM had in tht US, and ended up being unaprochaeble, whatever they do. Their cars don’t drive as well as Fords, they don’t have the perceived quality of the other german brands (excluding Opel) They haven’t had a good looking car since I don’t even know. (I know this is subjective, but the closest to a interesting design in 15-20 years is the Scirocco) Their actual quality hasn’t been better than Ford or Opel since the early 80′s when they still made quite uncomplicated cars. But european car buyers are extremely conservative, and can’t forgive Ford and Opel for the low quality of the 80′s cars. We can’t forgive the americans for building gas guzzlers in the 60′s-70′s, we barely forgive FIAT for uilding rust buckets in the 70′s. And so on.

  • avatar
    Augie the Argie

    Opel could be the upscale brand where GM builds Chevrolets around the world. For instance in Argentina, South Africa, Uruguay, and USA Opels represented classy imports during the 60-80s. Maybe they could revive the brand overseas if competition in Europe is so stiff. Just an idea…

    • 0 avatar
      Magnusmaster

      That’s GM plan in some South American countries (Chile and Argentina first). Problem is, thanks to GM decontenting the old Opel models during the last decade and not introducing new Opel models, nameplates such as Corsa, Astra and Vectra became synonymous with cheap cars. When Opel comes to Argentina later this year, they’ll only sell the Insignia, Ampera and Zafira, since nobody is going to pay 20k dollars for a Corsa… GM Brazil screwed up badly with the Opel models.

    • 0 avatar
      PenguinBoy

      GM just eliminated Pontiac and Oldsmobile at great expense – it wouldn’t make much sense to introduce a new brand that was a slight step up from Chevrolet, at least not in North America. They also went to the trouble of killing Saturn, so it wouldn’t make much sense trying to introduce a brand for import intenders now.

      It’s been a long time since Opels or Vauxhalls were sold around here, I’m not sure anyone would remember them or consider them a step up from Chevrolet.

      We did get some reworked or rebadged Opel products sold as the Saturn Astra and Aura, but they didn’t sell particularization well.

      • 0 avatar
        Patz

        Interesting comment, PenguinBoy.
        From an European prospective – we here are not at all ‘mathcing’ Opels with Chevrolets.
        In the common European market view, actually Chevy are usually considered as cheap korean cars (a step below Hyundai and Kia), not as Opel’s relatives. Mostly, the people here perceives these brands as completely disconnected manufactureres.
        Opel is usually perceived as a German brand (expecially out of Germany….), similar/higher perception than Ford depending on single markets; but usually lower than VW.

  • avatar
    92golf

    Nice pic – sniffpetrol?

  • avatar
    Bryce

    Yet when Saab badges are stuck on this people were paying big money to drive Opels This probably why Saab no lopnger exists

  • avatar
    getacargetacheck

    Regional car brands will continue to face tough headwinds in a world that’s shrinking and globalizing. The brands that are doing well have a worldwide audience: Toyota, Ford, BMW, VW for example. GM’s whole legacy business model (lots of independent brands with regional focus) will insure trouble for years to come despite all protestations that GM is “out of the woods.” Lincoln, GMC, Buick, SEAT, Opel, Vauxhall, Chrysler and many more will fade away eventually as long as the globalization trend continues.

    • 0 avatar
      Patz

      I understand your view, but I’m not 100% in agreement.
      People all round the world are different, have different minds, opinion, tastes.
      And this will (hopefully) be forever. So in a globalization view, all the real ‘global’ vehicles failed to be global – there were always some markets where these cars were just ‘overlooked’ completely by the markets.
      Sometimes, a regional brand might help much. You ‘just’ have to find a way to make it real profitable.

  • avatar
    Buckshot

    Opel cars have a bad reputation.
    I used to own some Opels from 1970ies and 1980ies and they were not the most solid cars.
    Rust and cardboard are 2 words that describe those cars.
    They´re probably better now, but so are all other cars.

    • 0 avatar
      CJinSD

      In the US, Opels stopped being Opels at the end of 1975. For the 1976 model year on, GM imported Isuzus with Opel badges and sold them through Buick dealers. Opels of German construction next appeared in the US with different bodies as Bitters. More recently, the Cadillac Catera was an Opel.

      • 0 avatar
        mik

        I think the Saturn Astra would disagree that the importing of Opels stopped that long ago.

      • 0 avatar
        CJinSD

        mik,

        I’m not sure what your point was. The Saturn Astra was not sold as an Opel, and I listed examples of Opels sold as Bitters in the ’80s and Cadillacs in the ’90s. Do you know of Opels sold in the US as Opels after 1975? I’m always interested in true automotive trivia. You don’t seem to be a likely source of it.

      • 0 avatar
        geozinger

        @CJ: How is your listing the Opel Senator as a Cadillac Catera any different than listing the Opel Astra as the Saturn Astra? Same badge-engineering as the Senator/Catera, right?

    • 0 avatar
      panzerfaust

      I owned an early 70′s Rekord, and it was a great little car. Lots of interior room and as reliable as they come. But yeah, it had some rust issues, mostly around the headlights. But it didn’t have anywhere near the issues my room mates BMW of the same vintage had.

  • avatar
    panzerfaust

    Should read ‘Opel is the Chrysler of Europe that looks like a Ford.” Someone at Opel has a serious case of Fusion envy.

  • avatar
    msquare

    Here we go again.

    Of course Opel can’t price its cars like Audi or BMW because they’ve traditionally competed with Ford and VW.

    Not too long ago, the enthusiast media pined for Opels in the US, using the grass-is-greener-on-the-other-side-of-the-pond mentality to accuse GM of withholding their best product from its most important market. Same has historically applied to Ford, and with good reason. Compare the first US Escort with its European sibling

    Opel’s plight is nothing like Chrysler’s. In one way, they’ve been hurt by the rebranding of Daewoo as Chevrolet, and another by tougher competition in its core market. I also think they might have shot themselves in the foot with all the bailout talk, but it might have been necessary to appease our own government. No way will GM sell Opel, either.

    The worst thing that has been said about their cars is that they’re ubiquitous and dull, which is the same criticism Ford had to deal with until the MkI Focus came out.

    It does seem that Opel has followed Ford’s lead offering cars with an extra flair in how they look, feel and drive. That should help.

  • avatar
    obruni

    the Vauxhall Insignia received a Top Gear award when it came out.

    it still looks great.

    A weak spot for Opel has always been the Corsa. Opel finally managed to make it class competitive in the 2006 redesign, but its fading away again.

    and then there is the Agila, based on the Suzuki Splash. Unfortunately for Opel, the Suzuki is cheaper and better equipped.

    Opel’s offerings are less efficient and have higher emmissions than the competition, which makes it a hard sell for corporate fleet customers and for consumers living in areas with emission restrictions (another reason why VW is beating Opel in Germany)

  • avatar
    Tstag

    The Vauxhall part of the business does well, it’s generating sales in the UK that the rest of Opel can only dream of.

    GM’s problem is that Vauxhall/ Opel sells a lot more metal than Chevrolet in Western Europe. Chevrolet is nothing here. With Opel the problem is all those expensive German workers.

    So simple solution, keep the sucessfull Vauxhall brand and it’s UK base, but sell Opel and all the problems that go with it. Yes they share the same models, but I’m sure a deal with a future Opel buyer could be reached….

  • avatar
    windswords

    Before Thomas Stallkamp was president of Chrysler he was the VP of the supply chain. It was he who set up the self named “extended enterprise” dubbed by auto journalist as an “American Keiretsu”. At the time Chrysler had the best relations of the Detroit 3 with suppliers, maybe the best relations of anybody manufacturing in North America. As a result, Chrysler’s profit per vehicle jumped from $250 in the 1980s to a record $2,110 by 1994.

    Chrysler had plans to penetrate the European market. They were already selling in South America, building Jeeps in China, and selling right hand drive vehicles in Japan (in minuscule numbers of course). They used a plant in Graz Austria (now or also then owned by Magna) to build Grand Cherokees and minivans. But the big entry in the car market was the new 300M. It was originally to be the Eagle Vision (2nd generation) and was quite different from it’s Dodge Intrepid and Chrysler Concorde bretheren. It was a “5 meter car” designed to fit in European garages and had the amber turn signal lights. Chrysler sales were growing in Europe and the 300M would have added to those sales but then Daimler swooped in and that was the end of those plans.

  • avatar

    Opel and Holden have a similar problem, they both basically serve one small, mature market and GM tries to emphasize it’s US-homegrown brands in their markets at the detriment of it’s subsidaries.

    The Chrysler of Europe may not be far off in a comparison, afterall the cars sold here from Opel under Buick compete with Chrysler here.

    The biggest problem with Opel is that GM is cannabalizing it with Chevrolet and are hellbent on making Chevrolet a global brand courtesy of Daewoo. The other problem is that GM hasn’t given Opel a real export program outside of whatever they sell to China (which doesn’t necessarily help the labor since the kits are assembled in China).

    Opel really needs an export program under other GM brands like Buick to North America and China, Chevrolet to Central and South America and Africa and to Australia/New Zealand under Holden. Ideally the cars would be assembled in Opel’s plants but there are probably numerous reasons that is not happening.

    Holden is in the same boat, they need to expand outside of Australia. The way to do that is to export their products under different GM brands, Chevrolet and Buick. This is already done widely in the Middle East and South Africa under Chevrolet and the Holden Caprice goes to China as a kit to become the Buick Park Avenue. The Caprice is also coming to America for the Police, it’s too bad civilians can’t get one as well.

  • avatar
    geozinger

    Blue sky dreaming here, but if GM would find a way to get the OPC versioned Opels in wider distribution, maybe as Buicks, it would be a big deal.

    For years I have looked across the ocean at what my cousins can get; Irmschers, Bitters and now OPCs. How cool would it be to get a Buick Verano GS, being an Opel Astra OPC in disguise? Or maybe more fitting, a Cruze SS, again being an Opel Astra OPC?

  • avatar
    CarPerson

    Late in 1973, we went to the Buick dealer to look at a 1974 Opel Manta. Salesperson took us down to the basement in the freight elevator and asked “Is this what you are looking for?”, pointing to an outline of a car in the dark shadows of the basement.

    Some issues with it but if it had been improved over the years like others were, it’d likely sell in Accord + Camry quantities. GM and the GM dealers let that one slip right through their fingers.


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