Big Chevy Gains In Germany

by Bertel Schmitt

Published: July 13th, 2011

Opel is casting a wary eye at parent GM. GM unleashed Chevrolet in Europe. Nobody took it seriously until Chevrolet announced today that the bowtie brand sold 23 percent more Chevys in Opel’s home market Germany than in the first half of 2010. In the first 6 months of 2011, Chevrolet sold15,077 units in Germany.

The market share of Chevy remains minuscule in Germany: 0.9 percent. Opel commands a share of 8.1 percent, says Automobilwoche [sub]. Chevrolet is eyeing selling between 45,000 and 60,000 cars in Deutschland. In all of Europe, Chevrolet sold 251,820 units in the first six months.

If that stirs up your patriotic blood, take a deep breath: “The Chevys used to be called Daewoos and hail from South Korea,” says Automobilwoche. Chevrolet is selling them at bargain basement prices, which doesn’t make Opel happy.

#BertelSchmitt #Chevrolet #Germany #Opel

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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14 of 28 comments

Philadlj on Jul 13, 2011
Chevrolet is selling them at bargain basement prices Well what do you know, GM is still playing by Alfred Sloan's rules with regard to Chevy somewhere!

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Secret Hi5 on Jul 13, 2011

Wasn't there a tiff between VW and Skoda over a similar issue? I think VW went all Hitler on Skoda.

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- Cammy Corrigan on Jul 13, 2011
  
  There was. It was documented in this finely written, engaging and, quite frankly, superb piece published on this website. http://www.thetruthaboutcars.com/2010/03/the-skoda-conundrum/
  
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Conslaw on Jul 13, 2011

If the Chevrolet Lacetti is good enough for Top Gear, it should be good enough for anybody.

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Doctor olds on Jul 14, 2011

@Pch101- A bit presumptuous for one with no experience in the car business! So you think you are much smarter than the leadership of GM? I forget that many here think they know a lot about topics of which they really have no understanding. The fact is that the Buick-GMC channel is very profitable in America, despite the fact that you "can't see any possible way". Buick outsells most other premium brands: Lexus,Cadillac,Acura,Infiniti,Lincoln, and probably makes a lot more money for GM than Civic does for Honda in America. Likewise, Mini is a relatively low ticket car, assuredly with low profit margins. The problem with your analysis is that it doesn't comprehend profit per unit. Current Buicks command much higher prices-the LaCrosse commands $8,000-$9,000 higher average transaction price than the prior model, for example. Pre-auto market collapse, Pontiac was outselling Buick around 2 to 1, but the Auto Task force made GM cancel the brand in favor of Buick because Pontiacs could not command high enough margins to support engineering and marketing costs associated with maintaining the brand. Similarly, GMC Sierra is the 4th best selling pickup, sometimes nipping at 3rd place Ram's heels while commanding around $3,000 more profit compared to Chevrolet Silverado. Thirty Three of the brands sold in this country would be delighted just to achieve Buick-GMC's sales volume, let alone the channels profitability. This is the truth about GM's mid-tier channel. trucks outsell the

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- Vega on Jul 14, 2011
  
  "So you think you are much smarter than the leadership of GM? " Considering GM's track record over the last 4 decades I think large parts of the general population are smarter than GM leadership.
  
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- Pch101 on Jul 14, 2011
  The fact is that the Buick-GMC channel is very profitable in America, despite the fact that you “can’t see any possible way”. How exactly is that profitability a "fact"? As a numbers guy myself, I'd like to see your numbers. (And I'm pretty sure that you don't have any numbers.) I look at the lineup, and I see that all of them are carrying incentives. I see high fleet and low overall sales volumes, which are not high enough when combined with transaction prices at those levels, to recoup their R&D. Current Buicks command much higher prices-the LaCrosse commands $8,000-$9,000 higher average transaction price than the prior model, for example. Er, the Lacrosse is currently carrying a $1,500 factory-to-customer incentive. Sales volumes this year thus far are about 30,000 units, and if it's anything like the old days, then about 20% of that is fleet. None of that adds up to a profitable channel for cars. And for anyone who wasn't a Buick-GMC-Pontiac dealer prior to the bankruptcy, there wasn't any need for the company to maintain a third channel for the primary purpose of selling badge-engineered trucks (which, if you have followed the headlines, you should know are currently stocked with excess inventories.)
  
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- Philosophil on Jul 14, 2011
  
  doctor olds: "I forget that many here think they know a lot about topics of which they really have no understanding." I hope you're including yourself in this (Money? Behavior motivation? Human nature?), otherwise it's the old pot-kettle trick, and the third time I've seen that this week. On this topic, however, a good back and forth discussion and an interesting read.
  
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- Geozinger on Jul 14, 2011
  
  @Philosophil: FWIW, Dr. Olds is a recent retiree of GM Powertrain (I believe), but as his moniker notes, he was an Oldsmobile engineer. Few posters on here have direct experience in his end of the business. My own experience comes from having worked for a Tier 1 supplier and being a sales rat on the floor (not at the same time). My friends and relatives work on the line (GM) or for other suppliers (Delphi, Gentex), which tends to color my views about these companies. I'm no longer directly involved with the auto industry, other than being a consumer. I can live with his cheeleading as he's been there from the management and engineering side, with actual experience in that end of the business, something few commenters on this board have. YMMV.
  
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- Pch101 on Jul 14, 2011
  @Philosophil Dr. Olds is a recent retiree of GM Powertrain (I believe), but as his moniker notes, he was an Oldsmobile engineer. In other words, he was a member of the blame-everyone-but-ourselves-for-our-self-inflicted-problems culture that led GM to requiring a bankruptcy and a bailout. Incidentally, I had an internship with GM. That alone was eye opening enough to let me know that I'd never want a career there. The insiders are the least likely to get it, because they end up floating in a denial bubble instead of seeing how bad it really is.
  
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- Doctor olds on Jul 14, 2011
  
  @Pch101- I don't claim to have detailed specific current internal financial info, but I do know that GM leadership sees Buick as a profitable and very successful brand in AMerica. It was the fastest growing brand in America last year, as a matter of fact, and their sales volumes relatived to the other premium brands are also a matter of fact which you can confirm yourself. I will be delighted if you prove something I write is incorrect so that I can better understand the truth. It is a matter of publicly released fact that GMNA made nearly $6B in profit last year, empirical evidence that the region is very profitable. I contend a big part of that profit was produced by Buick-GMC. I also know from folks inside GM that GMC's command $2,000-$3,000 more profit than the equivlent Chevrolets. How do you think GM commands the highest prices of any full line maker? The transaction price increases I referred to were released by Buick some time ago. Most car makers have incentives on an on-going basis, perhaps excluding the Japanese who are capacity constrained right now. Also, $1,500 is actually a fairly small incentive for a LaCrosse class vehicle. If you are so sure that GM must be losing on the Buick-GM Channel, how do you rationalize all of those smaller volume makers existing in the U.S. market at all. Do you think they are money losers, too? If so, why are they here? I am continually amazed at the presumption of those who know nothing more about the people and facts at GM than what they read, hear, or see in media. For over 50 years, I had the opportunity,first to know socially, and later work directly with many of the top leaders from the days when some of them were just engineers. I am intimately familiar with what happened when, and the drivers behind the decisions, whether you want to believe me or not. @Philosophil- You may actually believe that money is not the biggest motivator of human economic decison making, but I doubt you can find a respected economist who agrees,and most thinking people know the truth.
  
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- Pch101 on Jul 14, 2011
  @Pch101 I will be delighted if you prove something I write is incorrect I used a process called "logical reasoning": Profit = Revenue - Expenses Revenue = Price per unit sold X Number of units sold Now the math: Mediocre transaction prices + Low sales = Not a whole lot of revenue It's funny. I remember prior to the GM bankruptcy posting some analysis here of GM's operating statements that led me to conclude that they were running out of cash and that bankruptcy was inevitable. (This was during the days that Wagoner was saying that BK was impossible.) Of course, the fanboys protested, claiming it couldn't be true. But it was true. An objective assessment would have made it obvious, but cheerleaders are incapable of objectivity. I would expect an "insider", blinded with delusions of grandeur, to be among the last to see it. If you are so sure that GM must be losing on the Buick-GM Channel, how do you rationalize all of those smaller volume makers existing in the U.S. market at all. A basic math issue: If you want to sell in low volume, you have to make up for it with higher prices. An exotic car maker such as Ferrari does it by selling cars in the six figures. BMW, Mercedes, etc. do it because they sell above $40,000 per unit. There is no way that Buick is commanding luxury car prices. There is no place in today's market for selling at low volumes and mediocre prices. Either the volume or the pricing has to go up; a company can't survive if it has neither.
  
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- Philosophil on Jul 14, 2011
  
  @Philosophil geozinger, No offense, but I wasn't questioning doctor olds' knowledge, experience and background as relates to this particular topic. In fact, I acknowledged it when I said "On this topic, a good back and forth discussion and an interesting read." I was simply pointing out that doctor olds has likely been as guilty as the rest of us in some other threads (and I included a veiled reference to one example that he should recognize) when he said "I forget that many here think they know a lot about topics of which they have no understanding." I haven't and wouldn't question doctor olds' knowledge and experience relating to automotive engineering issues, but simply point out that like the rest of us he sometimes ventures opinions (and sometimes very authoritative-sounding and condescending opinions) in areas that very likely extend well beyond his particular expertise (and about which other people here may actually have a much better understanding than he). As to this and other related topics, I just try to read and learn from people who know more about these particular issues than I do (and on these kinds of issues I include doctor olds among those from whom I attempt to learn).
  
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- Geozinger on Jul 15, 2011
  
  @Philosophil: OK, no offense taken, I didn't mean to sound pedantic either. I personally put more faith in the opinions of people who've done the time in the job. Dr. Olds is a bit of cheerleader at times, but I've found some of his insights excellent. As I have yours, too, to be honest. @Pch: I enjoy your comments greatly, and glad to see you're back. But I don't know if Dr. Olds as "part of the problem". I do like reading posts from people who are/were in the industry (like Mikey), as they generally can give us insights we may get have otherwise.
  
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