Opel and Vauxhall brands to focus on volume market
General Motors announced this week it would discontinue selling volume market vehicles under the Chevrolet brand in Europe starting in 2016 as the automaker redefines its brand strategy.
After purchasing struggling Korean automaker Daewoo, GM reintroduced Chevrolet to European markets using Korean-built products, such as the Chevrolet Aveo. This new plan sees Chevrolet continuing on in Eastern and Western Europe, but only selling low-volume vehicles like Corvette.
This will eliminate the current market split between Chevrolet and Opel/Vauxhall in most markets. Russia and other markets will still see volume market Chevrolets.
Currently, in the UK, Chevrolet markets Spark, Aveo, Cruze (in sedan, hatchback, and wagon bodystyles), Trax, Orlando, Captiva (née Saturn Vue in North America), Volt, Corvette, and Camaro.
This new plan could affect Chevrolet’s Canadian market offerings – in particular, the Chevrolet Trax – and other global offerings. Trax is not sold in the US and, when phased out in Europe, the lack of economies of scale could sideline the model.
On the higher end of the price spectrum, GM is aiming for a more global play with Cadillac, intending to introduce more models to Europe over the next several years. GM’s luxury marque has been aiming at the Germans as of late as competitive products make Cadillac a more palatable competitor to European tastes.
There’s no word yet on if any models in the current Chevrolet lineup will swap brands to be sold as Opels or Vauxhalls.
GM Strengthens its European Brand Strategy
- Opel/Vauxhall to compete as GM’s mainstream brands across Europe
- Chevrolet to focus on iconic products in Europe
- Cadillac to expand in Europe
DETROIT – General Motors today announced plans to accelerate its progress in Europe by bolstering its brands in the mainstream and premium segments.
Beginning in 2016, GM will compete in Europe’s volume markets under its respected Opel and Vauxhall brands. The company’s Chevrolet brand will no longer have a mainstream presence in Western and Eastern Europe, largely due to a challenging business model and the difficult economic situation in Europe.
Chevrolet, the fourth-largest global automotive brand, will instead tailor its presence to offering select iconic vehicles – such as the Corvette – in Western and Eastern Europe, and will continue to have a broad presence in Russia and the Commonwealth of Independent States.
This will improve the Opel and Vauxhall brands and reduce the market complexity associated with having Opel and Chevrolet in Western and Eastern Europe. In Russia and the CIS, the brands are clearly defined and distinguished and, as a result, are more competitive within their respective segments.
Cadillac, which is finalizing plans for expanding in the European market, will enhance and expand its distribution network over the next three years as it prepares for numerous product introductions.
“Europe is a key region for GM that will benefit from a stronger Opel and Vauxhall and further emphasis on Cadillac,” said GM Chairman and CEO Dan Akerson. “For Chevrolet, it will allow us to focus our investments where the opportunity for growth is greatest.”
“This is a win for all four brands. It’s especially positive for car buyers throughout Europe, who will be able to purchase vehicles from well-defined, vibrant GM brands,” Akerson said.
Chevrolet will work closely with its dealer network in Western and Eastern Europe to define future steps while ensuring it can honor obligations to existing customers in the coming years.
“Our customers can rest assured that we will continue to provide warranty, parts and services for their Chevrolet vehicles, and for vehicles purchased between now and the end of 2015,” said Thomas Sedran, president and managing director of Chevrolet Europe. “We want to thank our customers and dealers for their loyalty to the Chevrolet brand here in Europe.”
The majority of the Chevrolet portfolio sold in Western and Eastern Europe is produced in South Korea. As a result, GM will increase its focus on driving profitability, managing costs and maximizing sales opportunities in its Korean operations as the company looks for new ways to improve business results in the fast-changing and highly competitive global business environment.
“We will continue to become more competitive in Korea,” said GM Korea President and CEO Sergio Rocha. “In doing so, we will position ourselves for long-term competitiveness and sustainability in the best interests of our employees, customers and stakeholders, while remaining a significant contributor to GM’s global business.”
With the decision that Chevrolet will no longer have a mainstream presence in Western and Eastern Europe, GM expects to record net special charges of $700 million to $1 billion primarily in the fourth quarter of 2013 and continuing through the first half of 2014. The special charges include asset impairments, dealer restructuring, sales incentives and severance-related costs, and will pave the way for continued improvement in GM’s European operations through the further strengthening of the Opel and Vauxhall brands. Approximately $300 million of the net special charges will be non-cash expenses. In addition, GM expects to incur restructuring costs related to these actions that will not be treated as special charges, but will impact GM International Operations earnings in 2014.