Opel's Interim Chief: GM Parts Are Way Too Expensive

Bertel Schmitt
by Bertel Schmitt

We’ve been told again and again that pooled parts purchasing produces profits. Baloney, Opel interim-chief Thomas Sedran will say in an interview that Germany’s Tagesspiegel will publish tomorrow. He says something GM customers have known for a while: Parts from GM’s bin often are too expensive, and by sourcing them elsewhere, one can save a lot of money. “We are talking a significant order of magnitude,” Sedran will say tomorrow.

According to Reuters, which received an early copy, Sedran will say:

“GM has global requirements for parts and components that are unusual in the industry. A starter is tested at 40 degrees below zero, just as would be needed in Alaska, otherwise it fails the test.”

Sedran hasn’t been Opel chief for long. With a little more experience, he would know that he is on the right track towards the rest of the story.

“The profit is in purchasing,” is an ancient rule in the business, and not all profits generated by Purchasing in Detroit are passed-on to Rüsselsheim. Internal parts sales are a favorite way to shift profits elsewhere. Maybe that’s what Sedran is trying to say. But I doubt it will further his career.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Rpol35 Rpol35 on Oct 05, 2012

    "He says something GM customers have known for a while: Parts from GM’s bin often are too expensive" Substitute any other auto manufacturer for "GM" and it's the same story. OEM parts are always too expensive and rarely purchased when there is a competitive third party supplier. This is nothing new.

  • Redmondjp Redmondjp on Oct 05, 2012

    What is this guy talking about? GM parts are already being made in low-cost countries. I have been ordering a slew of "genuine" GM parts lately and I was shocked to find that the turn signal and cornering lamp lenses were made in China. Alfred P. Sloan is turning in his grave somewhere. And even Hella has moved production to China (to compete with all of the counterfeit Hella parts already being made there!).

    • Geekcarlover Geekcarlover on Oct 05, 2012

      Ditto Ford. Many of the parts for my Ranger were tagged Hecho en Mexico. Though a friend claims the individual components were from China and only put together in Mexico. Regardless, neither country is known for high production costs.

  • Spw Spw on Oct 05, 2012

    he is saying that GM is milking Opel by selling them parts at higher than market price.

    • Carfriend313 Carfriend313 on Oct 06, 2012

      You're right. It's simply victimisation through cost-centring. I've read some fairly convincing statements that suggest Detroit has been doing this to Opel for a long time. Even now, I've heard a rumour that Buick is taking Regals from Opel at cost to Opel.... I'm not saying it's certain, but I've heard whispers.

  • Jthorner Jthorner on Oct 07, 2012

    Now wait a minute. Doesn't Opel sell vehicles into Scandinavia and Russia? I smell hyperbole when the Opel person is saying that corporate parts are too expensive because they are "better than they need to be". My BS detector is going off.

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