By on January 28, 2014

opel-cascada-cabriolet-2013-001-1350468054

Appearing before Opel’s best and brightest in Germany, General Motors CEO Mary Barra proclaimed her company’s European brand, though unprofitable, is a vital one for the General.

Last year, GM announced they would invest $5.5 billion through 2016 to fund the development of 23 new models and 13 new engines to aid in the overhaul of Opel’s aging lineup, with president Dan Ammann — responsible for global regions under Barra — being nominated as supervisory board chairman at Opel. The automaker is also holding firm on plans to build an all-new vehicle for Opel’s main factory in Germany, all in an effort to help the brand return to profitability by the middle of the 2010s.

In turn, GM recently withdrew Chevrolet from Europe to give Opel more breathing room, as well as planning to shutter Opel’s plan in Bochum, Germany by the end of 2014. Meanwhile, the Ruesselsheim will be assigned a new model sometime down the line to go with the Insignia and Zafira Tourer.

European sales of Opel and Vauxhall fell 1.5 percent in 2013 to 825,000 units, while market share held at 6.7 percent. The duo are the third-largest brand behind Volkswagen and Ford.

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54 Comments on “Barra’s GM Holding Firm On Plans To Revive Opel Profits...”


  • avatar
    Robbie

    When the Samnite Gaius Pontius asked his father what to do with the Roman army that had surrendered to him, his father first answered “Set all the Roman soldiers free!”, and when asked again a second time, his father answered “Kill them all!” The first option would have made the Romans friends of the Samnites in perpetuity; the second option would have given the Samnites some chance of total victory. Instead, Pontius chose a middle road, and was eventually killed by the Romans.

    GM should either kill Opel, or allow it to build the best cars it can. But the current middle road option seems a recipe for certain failure.

    • 0 avatar
      fredtal

      Problem is GM has a history of abandoning brands and markets and then going back in. Usually when managers come and go. Personally I would want to stay in Europe and Opel is good a brand to do that. Still I agree with Robbie, “sh&% or get off the pot.”

    • 0 avatar
      RobertRyan

      Thy were doing their best to undermine Opel in its own market, by introducing “Chevrolet” and using rebadged Opels as “Chevrolet, Buicks in the US. Not a consistenr vision.

  • avatar
    Hummer

    Europe seems like a lost cause, you can’t compete with luxury, you’ll have your rear end handed to you, and GM already showed their lack of care for the lower end of the market.

    So now they’re the Buick of the market.
    While there’s nothing inheritally wrong with that, it’s a terrible plan if your goal is to have high sales.

    Niche market are in a similar problem in that EU laws kill good niche vehicles for the masses.

    I mean what slice of the pie does GM want to get that isn’t taken?
    In the past they’ve shown complete disregard for Europe by sending them cars from Korea. They have destroyed the foundation.

    • 0 avatar
      ect

      Europe is too strategic to GM to ignore, especially as Opel does so much of its engineering/design work.

      And Opel/Vauxhall are not niche producers. As noted, GM is in 3rd place in EU sales, which places it ahead of Renault, PSA, Fiat, BMW, Mercedes, Toyota, Nissan and Hyundai, among others.

      The Korean cars were sold as Chevrolets, not Opels.

      Opel/Vauxhall has to succeed as a mainstream producer. It sells a respectable volume of cars, the challenge (as with Ford Europe)is to make it profitable.

    • 0 avatar
      piro

      Niche? I think this shows a lack of understanding of the EU market, especially in the UK.

      For 44 consecutive years, Vauxhall has had AT LEAST 2 cars in the top 10 best selling in the UK. Even in 1974 and 1975, Vauxhall has one car in the top 10 in those years.

      https://en.wikipedia.org/wiki/User:DeLarge/Top_10_best_selling_cars_in_Britain

      If I were to look out of my window and count the number of Vauxhalls parked in the row of 8 houses where I live, it would be no less than 4 that I can recall off the top of my head.

      • 0 avatar
        Hummer

        I wasn’t referring to existing operations as niche, I was referring to GM’s vehicles that Europe can’t possess in mass, due to EU restrictions.

        Not sure where you came to the conclusion I called Current operations a niche

        • 0 avatar
          krhodes1

          What EU restrictions? You can try to sell pretty much anything in the EU. If people won’t buy them because they are unsuited to local conditions that is hardly the EU’s fault. The market is certainly FAR more open than the US.

          The number of people who want a pickup or a Corvette in Europe is miniscule, but that doesn’t mean Opel can’t produce a top-notch Golf competitor.

          Of course ultimately the issue is that there is no room in the middle. You get squeezed between the good cheap cars like the Dacias, and the low end offerings of the premium brands like a BMW 116i. You end up with a cost structure too close to the premiums with prices too close to the budget brands. It’s the same problem for Ford, Renault, and Peugeot.

          • 0 avatar
            Pch101

            The EU has a 10% import tariff on cars, one of the higher tariffs in the developed world.

            The EU has a 22% import tariff on trucks with engines of over 2.5 liters.

            And the EU has high costs for owning gas guzzlers, which are the one thing that the US does well.

            On the whole, if Americans want to sell cars in Europe, then they need to make them in Europe. It’s not a closed market, but it’s no more open than the US.

          • 0 avatar
            RobertRyan

            @Pch101
            “On the whole, if Americans want to sell cars in Europe, then they need to make them in Europe. It’s not a closed market, but it’s no more open than the US.

            Yes very similar to the US Market.

          • 0 avatar
            Pch101

            The EU has one of the highest import tariffs in the developed world, at 10%

            The US has one of the lowest, at 2.5%.

            Not really very similar at all, really.

          • 0 avatar
            doctor olds

            Ask VW, the world’s most profitable maker, which is the toughest, most competitive market in the world.

          • 0 avatar
            RobertRyan

            @Pch101,
            It is much easier to sell a vehicle from outside the EU in the EU Market then sell a vehicle from outside NA in the North American market.

          • 0 avatar
            RobertRyan

            “Ask VW, the world’s most profitable maker, which is the toughest, most competitive market in the world.”
            Easy as Alan Mullaly said Australia.

        • 0 avatar
          ect

          I understood you to to say that Opel/Vauxhall has no future trying to be a niche producer. With which I agree. But they never have been.

  • avatar
    APaGttH

    Opel is doomed.

    • 0 avatar
      28-Cars-Later

      DOOOOOOOOOOOOOOOOOOOOOOOOOMMMMMMMMMMEDDD.

    • 0 avatar
      doctor olds

      Opel will be revived. They held market share last year and will be getting new products. As I recall, it was also said GM would be liquidated by now instead of running for #1 in the world and making money doing it!

      • 0 avatar
        RobertRyan

        ” As I recall, it was also said GM would be liquidated by now instead of running for #1 in the world and making money doing it!”

        Currently 3rd, but if you take the Chinese maker of tiny Vans out of total sales, closer to 4th. Opel will come back with “Chevrolet” being disposed off from the European market.

        • 0 avatar
          doctor olds

          GM is 2nd and gaining on first place Toyota. 3rd place VW is also gaining, but failing in NA.

          • 0 avatar
            RobertRyan

            Certainly not anymore.
            http://www.rte.ie/news/business/2014/0131/501395-volkswagen-now-second-biggest-car-maker-in-world/

            If you take the 1 Million tiny Vans done by a Chinese maker, then they are very close to Renault-Nissan
            http://www.industryweek.com/global-economy/renault-nissan-alliance-sells-record-83-million-vehicles-2013

          • 0 avatar
            CJinSD

            Your Renault article contradicts your VW article.

          • 0 avatar
            RobertRyan

            @CJin SD,
            “http://www.industryweek.com/global-economy/renault-nissan-alliance-sells-record-83-million-vehicles-2013″

            The article was done prior to the VW article
            Some more references:
            http://www.magnetimarelli.com/focus-on-automotive/vw-2nd-group-world-general-motors-beaten

            This was done earlier but gives a truer ranking
            http://www.forbes.com/sites/joannmuller/2013/04/18/vw-is-already-the-worlds-leading-automaker/

            “But if you’re wondering which carmaker is the biggest, most powerful company in the industry, it’s no contest: Volkswagen.

            The German manufacturer has the highest revenues, profits and assets of any automaker, according to Forbes’ 2013 Global 2000 list. Its market value is second only to Toyota’s.

            Ranking companies on a single metric, like sales, can be misleading, which is why Forbes uses a composite ranking, giving equal weight to sales, profits, assets and market value. With this method, Volkswagen easily outpaces the No. 2 automaker on the list, Toyota, which is recovering from a series of natural disasters and self-inflicted wounds, and No. 6 GM. VW made $28.6 billion profit on $254 billion in revenues in 2012, and its assets were worth $408 billion. Yet its market “

          • 0 avatar
            doctor olds

            VW finished #3 according to Bloomberg.

            http://www.bloomberg.com/news/2014-01-11/vw-sells-record-9-7-million-cars-in-2013-on-audi-demand.html

            If you want to take out Chinese joint venture volume- take it from VW, Toyota and Nissan, too. They all have 50/50 joint ventures in China, as required by the Chinese government.

            My point stands- GM is profitably competing for the #1 spot in global sales volume, but has a long way to go to rival VW’s or Toyota’s profitability.

          • 0 avatar
            RobertRyan

            That Bloomberg article was much earlier than the corrected figures which puts GM narrowly 3rd. The Chinese mini vans are not a shared venture,but a Chinese Manufacturer that GM invested in. Yes VW is vastly more profitable than,GM.and both VW and Toyota are on their way to becoming a very solid No1 and 2

          • 0 avatar
            Big Al from Oz

            @RobertRyan
            I do believe that the way in which you value a company isn’t by quantity of product.

            It’s all about dollars and cents. Bigger isn’t necessarily better. I might just mean that GM isn’t efficient at making money as VW or Toyota.

            If I was looking for a life long career in the auto industry, who would you look at a teetering company or a solid company?

            If that was the case BHP would be the largest company in the world based on weight of product sold, far bigger than GM.

          • 0 avatar
            RobertRyan

            @Big Al From OZ,
            “I do believe that the way in which you value a company isn’t by quantity of product.

            It’s all about dollars and cents. Bigger isn’t necessarily better. I might just mean that GM isn’t efficient at making money as VW or Toyota.”

            Forbes uses a similar analysis and rates GM the 6th largest Automobile Corporation.A sales analysis would make them 3rd.

  • avatar
    Rod Panhard

    What would you expect Ms. Barra to say?

    For starters, I seriously doubt that in the interview process, the search committee on the GM board asked her, “Mary, what will you do to revive Opel” and she said, “I dunno” and shrugged her shoulders.

    Give her a chance. I’m pretty sure they’ve got a plan. Being #3 behind Ford & VW is a helluva a lot better than being behind Fiat, Peugeot and Renault.

  • avatar
    brianyates

    panhard, perhaps you haven’t driven a new Peugeot,Renault or Fiat.
    Seems silly to have two cars(Vauxhall and Opel competing against each other, kill Opel keep Vauxhall.

  • avatar
    brianyates

    That’s the point.

    • 0 avatar
      ect

      You miss the point. Vauxhall and Opel are not competitors. They sell identical models, using identical model names. Vauxhall is GM’s UK brand, Opel is the brand elsewhere in Europe.

  • avatar
    SCE to AUX

    That article mentioned that GM has lost $18 billion in Europe since 1999, and a little research shows that GM’s market share there has dropped from 11% to 6.7% in the same time period.

    The $5.5 billion investment decision was made prior to Ms Barra’s tenure, but I can’t see how GM can regain lost ground while everyone else is improving their products, too. The most they might regain is a point or two, but over a period of many years.

    • 0 avatar
      sunridge place

      Cost reduction through another plant closing next year, employee buyouts, and more platform sharing will help. Market share doesn’t have to go back up to 11% to make money.

  • avatar
    mjz

    Opel may lose money on its own, but look how much money GM makes on Opel designed Buicks in China and NA. That’s a million units of volume. Still worth keeping them Opel around for that reason alone.

    • 0 avatar
      xflowgolf

      That’s been my critique and question. We always hear the “Opel loses money in Europe” headline, but here in the US I see plenty of Buicks out driving around. I hear Buick does “okay” in China too…

      So, are we attributing R&D costs to Opel only against Europe sales, and ignoring the overall benefit they provide rebranded in global markets? seeing forest through the trees?

      What would Buick be if Opel was gone?

      • 0 avatar
        Pch101

        R&D is a relatively small percentage of an automaker’s expenses. That’s not going to make the difference.

        Opel has similar problems to what plagued GM in North America prior to the bankruptcy — it has a tarnished brand, which reduces its pricing power to the point that its expenses are higher than the revenues that it can command.

        Cars cost a lot to make. A company with a moderate cost structure but no pricing power is doomed to lose money. In order to make money, the cars have to become more desirable so that people will pay more for them — the losses go away when the higher revenues per unit roll in.

        GM has long had a fixation of cost reduction strategies that came at the expense of brand building, and that’s what led it to fail. Hopefully, they’ve learned from the mistake.

      • 0 avatar
        RobertRyan

        Basically it and undercutting Opel in its own market by introducing “Chevrolet” was a very stupid idea. Opel engineering underpins virtually all of the current US GM sedans.

  • avatar
    skog

    Who actually buys Opels nowadays? I recently spent two years in Germany, in Bavaria where obviously BMW and Audi are well represented. But i saw hardly any Opels anywhere.

    There are quite a few as taxis but very few people drive them privately.

    They seem to be lost without a market segment, caught between VW/Skoda and the cheaper imports on one side, and the premium brands on the other.

    • 0 avatar
      Pch101

      In the EU27, Opel/Vauxhall ranked third place for market share in 2013 (6.8%), behind VW (12.5%) and Ford (7.4%). Market share was flat year-on-year, which means that sales fell during the year (down 1.4%.)

      I would presume that a lot of the sales are going to discount fleet, such as rental. The lack of desirable luxury cars makes Opel uncompetitive in the German company car market, which is a real weakness.

      • 0 avatar
        ect

        One should never presume.

        Historically, my observation has been that market share in the EU is more volatile than in the US, with more consumers than in the US preferring the newest models, rather than sticking with a favourite brand.

        In the UK companies I’ve worked with, those who get company cars are especially keen to have the “latest and greatest”, rather than a particular badge.

        Opel’s product line, as the article notes, is older than its competition. This, more than the lack of a luxury product, is likely the major drag on sales.

        Certainly, the lack of a luxury line hasn’t hurt Ford. Luxury is a small part of the market, as anyone who’s been to Europe can see.

        • 0 avatar
          Pch101

          Germany is the largest car market in Europe. Last year, 24% of EU27 new registrations were in Germany.

          In Germany, companies tend to have one fleet relationship. So if the head guy wants a Bentley, that means that the underlings are going to be driving Audis and Volkswagens, given the relationship with VAG.

          Neither Ford nor GM have anything to offer those executives. That’s a serious liability in a country such as Germany, and you can’t sell in Europe while ignoring what the Germans want.

          • 0 avatar
            thornmark

            Ford has the Fusion Ghia.

            No, Titanium.

            No, Mondeo Vignale .
            http://www.dailyfinance.com/2013/09/07/would-you-buy-this-fancy-ford-fusion/

          • 0 avatar
            ect

            Do you make this stuff up as you go?

            I’ve done business across Europe (as part of around the world) for over 30 years. So long that I can remember West Germany, before the Wall came down.

            It is nonsense to say that fleet buyers have single-company relationships. Just as it’s nonsense to say that private companies sell for public-company multiples.

            In Germany, the head guy and the executives drive Mercedes or BMW. Larger Audis are not very popular (Germany is not China). Bentley isn’t an executive car at all.

            But the managers, salespeople, service reps and others who drive company cars sure don’t get Mercedes or BMWs to drive. They get VWs, Fords and Opels.

            It is axiomatic that, in the car biz as in other markets, customers prefer new models to older models. When the financial crisis hit in 2008, most car makers pushed back new model development, to save money. As Bertel repeatedly told us, VW decided to maintain their development program. Which I thought at the time was a rare example of real long-term planning.

            The result? During the 2010-2013 period, VW introduced a number of new models, much more than their competitors. As a result, VW has gained market share and the others have lost it.

            Ford had a few new models, which have apparently done well, and therefore haven’t suffered a major decline – though they have had a decline.

            Opel/Vauxhall have soldiered on with an aging product line, and their sales/market share results reflect that. The uncertainty about the future of Vauxhall/Opel has undoubtedly also had an impact.

            Will GM’s new investment in the brand bear fruit? As the Zen master famously said, “we’ll see”.

            Pch, I think you’re a smart guy overall, but I often get the sense that your knowledge is “book larnin”, as they say.

          • 0 avatar
            Pch101

            “In Germany, the head guy and the executives drive Mercedes or BMW. Larger Audis are not very popular (Germany is not China).”

            You should probably inform the Germans of this fact, as Audi is outselling BMW in Germany.

            Then again, Ford would probably be happy to know the lack of luxury cars hasn’t done it any harm, while it reports a $1.6 billion loss in Europe for the year. I’m a bit surprised that your experience didn’t teach you anything about the importance of margin, but I’m just a finance guy who apparently reads books on occasion.

          • 0 avatar
            ect

            When I walk the streets of north European cities (German and others), the Audi I most often see is the A3. Not an executive car.

            In southern Europe (by observation), far the most popular Audis are the A1 and A2. But that’s apocryphal.

            According to best-selling-cars.com, Mercedes substantially outsells Audi in Germany, year after year. Audi did, as you say, outsell BMW in 2013, but not in 2012. Audi’s 2013 sales rose on the strength of the A3 (about 1/4 of Audi’s total German sales).

            The 3-series (the lowest level of executive car) far outsells the A4. The C-Class also outsells the A4.

            Moving up the food chain, both the 5-series and the E-Class outsell the A6. One may infer from the “best-seller” data and total brand sales that the S-Class owns the top tier. Which is consistent with my personal observation – I can’t recall ever seeing an A8 in Europe.

            If German companies did have single-supplier fleet relationships, neither Mercedes nor BMW could achieve the volumes they do with their “executive class” offerings. And neither could Ford or Opel with their “for the masses” offerings that lower levels get.

          • 0 avatar
            Pch101

            So you want to elevate your anecdotal observations above my data? Now I can see why this is going so well.

            The majority of luxury cars delivered in Germany are company cars. The automakers are also in the leasing business, and leasing companies specialize in managing one offering, i.e. Alphabet offers BMWs and MINIs, as it is owned by BMW.

            There is no luxury car market in Germany without leasing, and the type of car available is part of the compensation package. There isn’t just a free choice of vehicles for most executives; their choices are tied to the fleet service that the employer provides.

            Meanwhile, it’s not exactly a secret that GM’s fleet business in Europe is disproportionately going to rental. Even the head of Vauxhall admits to this. In many ways, GM’s problems in Europe aren’t much different from what they traditionally have been in the US, except GM can’t use full-size trucks to fix the Opel business.

          • 0 avatar
            ect

            “So you want to elevate your anecdotal observations above my data? Now I can see why this is going so well.”

            You offered no data. I offered anecdotal observations for what it is (this is called being conversational), followed by hard data from a referenced source. Which confirms my observations.

            “The majority of luxury cars delivered in Germany are company cars.” This is true. And the sales data show that the S-Class and 7-series each outsell the A8, while the E-Class and 5-series each outsell the A6.

            Which is important because most company cars are definitely NOT executive cars. They’re the cars driven by salespeople, service reps, etc. Cars that neither Mercedes nor BMW can supply. Cars supplied by the likes Ford, Opel, VW.

            “The automakers are also in the leasing business” Of course they are. But most leasing companies, and far away most of the leasing business, is done by leasing companies owned by banks and other financial services companies. These companies will finance vehicles from any manufacturer, and this flexibility is the basis of their sales approach.

            “The lack of desirable luxury cars makes Opel uncompetitive in the German company car market”.
            “In Germany, companies tend to have one fleet relationship. So if the head guy wants a Bentley, that means that the underlings are going to be driving Audis and Volkswagens, given the relationship with VAG.”

            These statements are simply not true. Which is where we started. Your increasingly strident efforts to deny this mistake are becoming more and more ridiculous.

            I have seen that, like Big Al, you have some compulsive need to get in the last word, as if that denotes some sort of triumph. So, go ahead. But as far as I am concerned, this conversation is over.

          • 0 avatar
            Pch101

            “A company car that can be used privately is one of the auxiliary services employers can render in addition to income. In doing so, employees are offered varying company car programmes. They do not always have free choice when it comes to the make. In fact, ***most companies only supply certain makes of car and equipment***, in order to keep administration low.”

            http://www.working-in-germany.com/company-car-0120.html

            “As a consequence we have found, that when recruiting in Germany, often the subject of the company car, ***what kind of car***, what configuration it has etc. is a subject which requires more time in the negotiation of the package than the salary itself! In Germany, the company car is definitely a status symbol and is vigorously defended. Therefore a “car allowance”, while accepted by some, is nonetheless a very poor second to a fully expensed company car.”

            http://www.cornerstone-group.com/2013/10/02/dont-offer-german-hire-car-allowance-hes-expecting-car/

            Sorry, but your comments re: car choice were not correct. Your anecdotes mirror your selection bias, not what actually happens.

  • avatar
    Buckshot

    “Who actually buys Opels nowadays?”

    I don´t understand that either.
    New Opels in Sweden are few and far between.
    You get a german car a bargain price but the quality is not up to the pricetag.
    Maybe they are popular in eastern Europe?

  • avatar
    HerrKaLeun

    “the development of 23 new models and 13 new engines to aid” this must be for all GM vehicles not jsut Opel? Not even VW with all its brands has that many models, unless GM plans to badge-engineer and call each trim a model.

    And who needs 13 new engines? Why not 6-8 really good ones inc. diesel versions? Are they planning to sell engines in 1-hp increments? it always was one of the European car companies games to offer dozens of engines with 2 good ones and the rest garbage. Maybe that is why cars are so much more expensive in Europe, all the production management, certification, testing, tooling etc. In the early 1990s VW used to sell the Golf with carburator, fuel injection, and 5 different displacements, and that is just the gasoline versions. They had 4-speed and 5-speed options.. talk about inventory nightmare (that’s why people have to factory order there)

    • 0 avatar
      Onus

      Tax regime is it. Some can take the higher co2 and he others can’t.

      The ordering process allows this and it isn’t an effect.

    • 0 avatar
      mike978

      People factory order because they are willing to wait a few weeks and don`t need instant gratification. Also the dealerships don`t have acres of space to stock hundreds of cars. Land is on average cheaper in the US.

  • avatar
    mjz

    That Opel Cascada would make a fine new Buick Wildcat here! Hope they bring it over, especially with Chrysler dropping the 200 ‘vert.


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