By on July 3, 2012

GM has blamed Western Europe location for Opel’s woes, unions, the economy. Opel has a brand crisis, and the crisis is “a self inflicted-wound,” says Christiaan Hetzner, Reuters’ man in Frankfurt, Germany, in an article on why Opel is in so much trouble. “Reputation is seen as the problem, not cars.” The recent attempts to move the Opel brand up-market ripped those old wounds open and could kill the patient.

In January 2010, then-Opel CEO Nick Reilly announced a plan to move the brand up-market, and to position it as the “leading European manufacturer of high quality, desirable automotive products, based on German Engineering.”

It was a belated move. In the 90s, Volkswagen began to move its brand upwards in a strategy called “Höherpositionierung”(up-positioning.) The Phaeton was the banner bearer of that strategy, and success was mixed. When Reilly announced his “Höherpositionierung,” Volkswagen already retreated from theirs. The new Jetta, the US-Passat, the UP! series are examples of this re-orientation.

Opel never had much of an image, but lived well with it. 40 years ago, Opel was the market leader in Germany and sold more cars than Volkswagen. Today, Opel’s market share has dropped below 8 percent. Its own dealers don’t understand the brand anymore:

“What kind of brand is Opel, and what customer group are we trying to address?” asked Jaap Timmer, European Opel dealers’ president and a supervisory board member ahead of a key meeting last Thursday. “First it’s supposed to be premium, then it’s not premium – we need a clear strategy.”

According to the article, GM global marketing chief Joel Ewanick wanted to move Opel upmarket and out of the way of Chevrolet, which Ewanick positions as a value brand. That premium image did fit Opel like a rented tuxedo on a redneck. Says the Reuters article:

“Former Opel labor leader Klaus Franz was critical of Ewanick’s plans at the time. He feared the brand would lose its existing more price-conscious customer base. Going upscale was the “Saab-isation” of Opel, Franz declared, in reference to GM’s Swedish premium marque, which died a slow death.”

Doubts about Opel’s future make customers shun the brand even more. “Someone who is uncertain about the future of a brand won’t buy a car from that company,” says Ferdinand Dudenhoeffer, head of the Center Automotive Research (CAR) in Duisburg. “GM and Opel have themselves to blame.”

Brands can be turned around, but it needs time and dedication. 40 years ago, when blue collar Opel ruled the roost, Audi was nowhere as a brand. Today, it is a brand envied by car companies around the world.

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46 Comments on “Ewanick’s Bad Brand Strategy Kills Opel...”


  • avatar
    Nutella

    That’s right, Opel learned from Saab how to make good cars while Saab was neglected by GM. So with Opel GM got stuck with the worst of both world, expensive cars (high costs) and no brand (low revenue).
    Had they been smart, they would have kept a semi premium brand (Saab) that had potential (think Audi) and kept Opel where it belongs.
    Typical quarterly driven product strategy. No vision. 100%GM.

    • 0 avatar
      CJinSD

      If they were smart, they’d have let Saab go out of business on its own 20 years ago.

      • 0 avatar
        Nutella

        I suppose you would have said that about Audi in the early eighties. GM is chronically unable to have a long term strategy.
        You comment reflects a typicall quarterly driven way of running companies, which is *not* what Toyota or VW are doing.
        The is in part an american illness with managers unable to look beyong the next quarter and not capable of understanding the value of branding (since it has no accounting value)

    • 0 avatar
      bd2

      Saab was an albatross (just as Volvo was for Ford).

    • 0 avatar
      Bryce

      Opel learned nothing from Saab Saab has always been a bitza an oddball bolted together with other peoples cast off parts

  • avatar
    mjz

    The problem seems to be that GM is trying to position Chevrolet as the global value brand. There isn’t room for two “value” brands. That would be like making Buick a “discount” brand here in the U.S. Wonder how this will change the strategy here of using Opels as Buicks, if Opels will really be more like Chevys in the future.

    • 0 avatar
      28-cars-later

      Buick is another dead brand walking I’m afraid as indicated by its Opelization. Cadillac is not too far behind.

      • 0 avatar

        Cadillac…”the new global standard”…HOWS that workin for ya GM??? Gettin’ rid of the ONLY GM brand that mattered (Saab) was/is a HUGE mistake. Spot the few NEW 95s out there…helluva lot better lookin’ than the Caddies or Buick.

      • 0 avatar
        FromaBuick6

        Hate to break it to you, but Saab never mattered.

        I saw a new 9-5 this morning oddly enough. It’s a fat blandmobile in every way. The only lasting impression it leaves is “My owner makes fantastically poor financial decisions.”

      • 0 avatar
        28-cars-later

        “My owner makes fantastically poor financial decisions.”

        +1 haha

      • 0 avatar
        bd2

        People are kidding themselves if they think Saab mattered (Saab didn’t even matter in much of Europe).

        Ford lost a mint w/ Volvo and Geely is looking for a partner to share platforms, among other things.

        Cadillac will be more than fine once sales of the XTS gets going (still sold over 700 even tho the launch was partway thru the month) and the ATS hits dealer lots.

        And w/ the new Escalade and CTS, Cadillac will likely be the 4th best selling luxury brand in the US and that’s before it revamps it CUV lineup.

        And how is Buick dead?

        Buick sold nearly 19k units for June; outselling Acura handily even w/ a more limited lineup.

        Also, Chevy isn’t as much of a “value” brand as one might think; aside from VW (that’s VW Europe), Chevy models like the Cruze and new Malibu have among the nicer interiors within their segments.

        But that’s the problem, GM can’t have both Chevy and Opel/Vauxhall competing against the likes of Ford Europe.

        Opel has to be at least as “upscale” as VW Europe, if not more so (offer better interiors for the same price as VW).

      • 0 avatar
        FromaBuick6

        “And w/ the new Escalade and CTS, Cadillac will likely be the 4th best selling luxury brand in the US and that’s before it revamps it CUV lineup.”

        Fourth place. Now there’s something to be proud of. Well I suppose it’s pretty good compared to…

        “Buick sold nearly 19k units for June; outselling Acura handily even w/ a more limited lineup.”

        Outselling Acura? Wow benchmarks don’t get more pathetic than that.

      • 0 avatar
        bd2

        That’s 4th (maybe 3rd) w/ a more limited lineup than MB or BMW (which have “4-door coupes”, fastbacks and other body styles out the wazhoo).

        Even w/o all those body styles, once Cadillac adds the Omega flagship and revamps its CUV lineup, it will be in the running for the top spot.

  • avatar
    Russycle

    Is that Danny Bonaduce standing in front of the Volt? That could be Opel’s problem right there….

  • avatar
    Pch101

    Those automakers that have strong luxury brands are weathering the European economic downturn. Those automakers that don’t, aren’t.

    Over the long haul, GM and Ford both need to get into that game. The question is whether they can. Opel may not have the right branding for the job, but GM does need to find a way to move upmarket. The mistake would be to believe that GM can continue to generate low average revenues per unit in Europe, and still go the distance.

  • avatar
    Adrian Roman

    If they want to have Chevrolet as a worldwide value brand why don’t they offer the Cruze here in Europe with the 1,4 turbo gasoline engine and 5/6 manual gearbox, but do so in the US?

    Especially since out here (Europe) there is a rapidly expanding market for such economic engines, and gas prices are roughly 50% and upwards more than in the US?

    It’s simply stupid, as was the decision to move Opel upmarket, after their cars have been known as rustbuckets for decades.

    • 0 avatar
      Pch101

      “It’s simply stupid, as was the decision to move Opel upmarket, after their cars have been known as rustbuckets for decades.”

      If GM is to move upmarket in Europe, it has three basic choices:

      -Import a brand
      -Invent a brand
      -Transform a brand that Europeans already know

      None of those is easy, but the last one is arguably the easiest of the three.

  • avatar
    el scotto

    Opel, is it a Saturn? is it a Buick? I say make ‘em hot, make ‘em fast and bring back Pontiac. Bias here, dad had a lot Bonnevilles.

  • avatar

    hmm…

  • avatar

    Franz says come crazy stuff, but he’s right about this. Handelsblatt says GM has lost $14b in the last decade on its “European business with the two brands Opel and Vauxhall” (apparently not including Saab)… and that was GM trying to move the brands upmarket during the good times. But the problem isn’t just that Opel can’t move upmarket; it can’t move down either without wreaking hell on Ewanick’s effort to globalize the Chevy brand.

    Rock, meet hard place… with Buick’s future stuck in the middle. Good times.

    • 0 avatar
      Nutella

      The problem has a lot to do with how creative or destructive GM accounting is. Why are they not booking the profits generated by the Opel/Saab designed Buicks under the Opel brand ? Why are they not allowing Opel to sell their cars (under the brand Opel) globally ?
      Why were the losses generated by the Caddy BLS in Europe booked under Saab ? How far will they go to pick the next accounting victim ?
      if Opel is treated from an accounting perspective as an engineering center by GM, whereas Buick is booking the profits , Opel will always be loosing money and Buick will always be a winner since they are not carrying their share of R&D.
      Deja vu, Saab was stucked doing work for other GM divisions while neglecting their own vehicles *and* carrying the R&D costs of their work under the “perennial loss making brand” Saab

      • 0 avatar
        Robbie

        Correct. GM is very confused here, and not Opel but GM is largely to blame for the losses in the Opel books. Still, this raises the question as to why GM enjoys positioning Opel into a nearly bankrupt type image. Is it simply an accounting trick, to fool the German unions into concessions?

      • 0 avatar
        Bryce

        SAAB never designed anything its been a dead brand ever since ther first DKW copy it should have been left to die in 89 nobody misses it

    • 0 avatar

      The problem with Opel is that it is a dead brand now. They have been working consistently on their way down over the last 50 years.

      There was a time when Opel offered viable alternatives (Opel Diplomat, Admiral) even to Mercedes (no Audi in sight, BMW almost down the drain, VW offering nothing but the Beetle and the 412). But Opel/GM never took this business serious. They ruined their mass customer base with bad quality plus bad service, they never really tried to out-competition someone in the market.

      Mediocrity at all levels was on offer for the last decades. Who really wants/needs Opels/Vauxhalls? The Chevrolet brand can offer cheaper mediocrity.

  • avatar
    philadlj

    I know this sounds simplistic, but wouldn’t the best course be to simply kill off Opel, considering even its dealers have no idea what it’s supposed to be? I remember a couple brands here in the U.S. that faced similar identity crises. Olds…Saturn…Pontiac…Mercury…

    • 0 avatar
      rubix560

      Pontiac never had an identity crisis….they were unique not just like mercury (mirrored cars of their parent company) it was a big mistake to kill off Pontiac. GM Finally got their heads out of their asses long to enough to make non ugly pontiacs especially the incredible g8 (not original but still great) then just killed the brand

  • avatar
    pk1

    Opel needs to develop its new brand strategy around the Meriva and the Ampera. Smart, new, young, worth its money.

    Message to VW: “WE ARE SMARTER!”

    Tools: More “cleverness” in the cars, like the doors and seat arrangements in the Meriva or the hybrid technology of the Ampera.

    Even if that doesn’t mean selling more hybrid cars than VW, Opel needs to make VW buyers look like stodgy, conservative, old people.

    THAT’S WHAT VW DID TO Opel 40 YEARS AGO.

    This day and age of changing technologies provides a unique opportunity for this.

    People will have to say, “Opel is the smartest German car company when it comes to new technology, the most up to date, look like VW are all conservative and slow. Are they (VW) still with our times?”

    VW does not have much chance to respond to this strategy as they are building their success on serving their customer’s expectations of continuity.

    The problem is, does the GM leadership understand “germanness” when it comes to approach and outcome?

  • avatar
    ranwhenparked

    GM’s problem is that, in Europe, Opel was always seen as very much the “German Chevrolet”, they built affordable cars for families and the masses that were honest and dependable, but not in any way prestigious or upscale (though like any full-range brand, they did have some higher end executive models in there too).

    Then, GM made the brilliant move of replacing Daewoo with Chevrolet in Europe, while at the same time making such drastic improvements in quality and engineering at the Korean division that the gap between Opel and Daewoo/Chevy was narrowed to virtually nothing. They basically transformed the former Daewoo into exactly the sort of brand Opel traditionally was, then realized that Opel still had to go somewhere.

    Opel still sells more than double the volume of Chevy in Europe, so maybe the real question is whether Chevy is really the be all/end all global brand for GM and would European customers care at all if the bowtie gave way to the lightening bolt on the lower end GM Korea models?

    • 0 avatar
      28-cars-later

      “bowtie gave way to the lightening bolt on the lower end GM Korea models”

      Maybe that’s the problem, why should the Bowtie or the Lighting Bolt grace junky Korean designed models in Europe? Wouldn’t it just be simpler to have Opel and Chevrolet I dunno, design their own fracking cars?

  • avatar
    FromaBuick6

    GM is run by clowns. They insist on stuffing 3+ sales channels into markets that can support, at best, two.

    Chevy already suffers from a reputation as a car for cheapskates, union slobs, blowhard fanboys and high credit risks. Making Chevy the worldwide cheap brand does nothing for its reputation. It’ll never get a foothold in Europe or (improve its standing in the U.S.) because it’s always artificially limited in price to protect the next brand up the chain. At the same time, Chevy kneecaps GM’s other, long-running overseas brands, which will never be taken seriously as luxury cars because all the serious GM luxury R&D goes to Cadillac.

    Why is this so hard? Chevy for the U.S, Opel/Vauxhall for Europe, Holden for Australia and Buick for China. Each sells the same cars with different trim and equipment relative to local economic/cultural standards. Everybody gets Cadillac. Continue to sell Wulings and all the other crap that’s foisted on “emerging markets” under any name you want and call it a day.

    • 0 avatar
      Pch101

      When the new GM claims that it wants to be Apple, what it means is that it wants to have a couple of brands that resonate with buyers in all markets.

      There was a lot wrong with the old GM, but regional-oriented branding was not one of them. The branding approach is a bit of a legacy cost, but it would be more productive to improve upon what’s left of it than it would be to completely reinvent it. GM does not need to be like Apple, nor should it aspire to be like Apple.

      However, the Opel situation is complicated by the possibility that GM may be wanting to deliberately set it up for failure, so that it can replace Opels with Korean imports. The approach here may be similar to what Saturn was originally intended to do in the US — cannibalize the existing brands until they were forced to admit defeat and surrender to the new guard. This all may be an elaborate stall that is part of an effort to eventually place the Opel unit into liquidation, with its imported replacements ready to take over.

      • 0 avatar
        28-cars-later

        If this is the strategy then why didn’t they sell it to Magna when they had the chance a few years back?

      • 0 avatar
        Pch101

        “If this is the strategy then why didn’t they sell it to Magna when they had the chance a few years back?”

        Different CEO –> Different strategy

        And even if the plan from the start had been to replace Opel with Chevrolet, the new GM would not want to turn Opel into a competitor that was owned by someone else. The proceeds of an Opel liquidation would have gone to the creditors of the Old GM — the new GM has no particular reason to want to help the old creditors at the expense of the new company.

        That being said, I doubt that GM wants to get rid of Opel per se, so much as it wants to get rid of the liabilities associated with Opel. If Opel was liquidated but its branding was purchased by GM in bankruptcy, then they should be able to sell anything that they like with an Opel badge, no matter where it’s built.

    • 0 avatar
      28-cars-later

      “because all the serious GM luxury R&D goes to Cadillac.”

      If this is true then GM is really run by clowns. I’ve followed GM since I was young and I don’t even ‘get’ Cadillac, all I see is a tired brand pretending to be BMW with one car model offered in three configurations with fancy Chevys tossed in for variety. Innovate!

      • 0 avatar
        bd2

        With the next gen CTS undergoing testing, it won’t be too long before Cadillac has 2 top-notch sedans.

        But will have to wait a little longer (a few more years) before we see a flagship and a revamped CUV lineup.

    • 0 avatar
      nickoo

      I believe there can be three channels in the US for GM. However, GM is blowing it at usual. Make Chevy the value brand similar to where VW put their newest Jetta and stop offering upscale tech packages/etc., keep Buick the middle brand where you can option it up with goodies, and move all of Cadillac significantly upscale. GM is suffering from too much brand overlap between Chevy and Buick and with the new impala is moving away from targeting the bottom, which is a mistake as GM’s biggest competitor is GM.

  • avatar
    Beerboy12

    I am having a hard time believing Opel is at fault here… I did think of a solution though. GM should kill Buick because that brand really has lost direction and relevance. Replace Buick with Opel in the USA by positioning Opel where it does best, right in the middle. I believe this move would be more honest and less confusing to customers buying Buick badged Opel’s and trying to get over the “retired person” image in their minds.

    • 0 avatar
      28-cars-later

      I actually had the same thought a few months ago, drop Buick for Opel in North America. I think the trouble is, look at Volkswagen’s US market share. They’ve pulled the whole ‘german engineering’ bit but build in Mexico or Tennessee for years and their overall NA share isn’t much, this is odd esp considering they are what the third largest automaker in the world? European style or flair isn’t going to play well in the US since there are already five major German brands (VW, Audi, Mercedes, BMW, Mini), one minor (Smart), and a few other European brands (JLR, Volvo, Fiat, soon to be Alfa) to choose from. Opel coming over should have happened in 2000 and replaced Olds, not 2012 its too late now.

      • 0 avatar
        Jacob

        I believe VW numbers are on the way up in USA. Of course, they can’t become a top selling brand overnight, but I am sure that the Big 2.5 and Japanese are taking notice. To my naked eye.. new Jettas are popping up everywhere, which seems unusual.

    • 0 avatar
      Jacob

      Let’s not forget that Buick in America was spared the GM cull because it actually sells well in China. The brand image could be hurt if “American” Buick is made and sold only in China.

      Some say that GM really does not need that many brands in America. They could go with only Cadillac to cover luxury cars and Chevrolet covering the rest of market. I can imagine there is room for two luxury GM brands, with Cadillac being more raw, edgy, and aggressive in looks and handling while Buick going after well to do people who primarily look for luxury and more suave driving experience.

  • avatar
    Dimwit

    The amusing thing is that it doesn’t matter. /JamesEarlJones This is GM. /JamesEarlJones.
    Whatever they decide to do, within 2-3 years there will be a change and they will do something else. It’s like watching a drunkard trying to walk a straight line… no matter how hard he tries, with the best of intentions, he fails. And it’s no one else’s fault. The whole setup at GM predicts failure no matter what they do.

    And then they continue. Another brilliant 5 year plan and off they go!

  • avatar
    Buckshot

    In the 1960s, 1970s, 1980s and 1990s? Opels was known as the worst rustbuckets on this planet. I have owned Opels from the 70s and the 80s, and that was not a good experience. Maybe they are better now, but a bad reputation is difficult to loose.
    Back then, Opels were pretty cheap to buy, but not now.

  • avatar
    W.Minter

    “leading European manufacturer of high quality, desirable automotive products, based on German Engineering”
    High quality? Fail.
    Desirable? Fail. In terms of reliabilty and a good package. Sheet metal is not enough.
    European manufacturer? Fail. Mokka, Antara made in South Korea.
    German Engineering? Yes. But that’s what you get when you’re buying a Chevrolet Orlando.
    Where’s the USP?

    Simple advivce for Opel:
    Build affordable, practical, reliable cars meeting the demands of changing demographics.
    Democratize access to leading safety, comfort and fuel economy features.

    They are close but fail in terms of “practical” and “reliable”.

  • avatar

    Opel always was German equivalent of Chevrolet. As far as I remember Opels were always cheaply made and crude by German standards. Even Ford made more desirable cars than Opel. As history shows all GMs efforts to resurrect or re-position brands failed except of Pontiac in 60s but they eventually screwed it also. GM does not need so many brands if it does not have know-how of brand management. Their idea of positioning brands is similar to P&G but for technically complex and emotional product P&G brand management approach evidently does not work. So I suggest to get rid (sell) Opel and Vauxhall and replace them with Chevrolet. Opel is not known outside of Europe and will fail in China or US if introduced – does not make sense to keep it to just for Europe if there is already Chevrolet which gains popularity and has better margins. Chevrolet is more flexible production wise. If GM wants to sell premium cars it can sell Cadillac in Europe. If it wants something between Cadillac and Chevrolet – there is Buick. Buick does not have history in Europe so it has a better chance to succeed than Opel as a semi-premium brand (which means Opel has zero chances). And luxury cars – even Mercedes failed to introduce luxury brand (it being Mercedes clone). Considering than GM is clone maker it has zero chances too sell luxury cars as well and BTW all British luxury brands are already owned by German companies. GM simply does not have capability to design luxury cars. It is not even capable of designing engines for luxury cars – V12 or V8, powerful and smooth and refined at same time.


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