Ewanick's Bad Brand Strategy Kills Opel
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.
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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“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".
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.