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.
In order for Opel to be profitable they need to sell vehicles at higher prices than Chevrolet, so there shouldn’t be overlap if product planning is executed properly.
I am sure GM’s global strategy is to sell the same Chevrolet ‘World Cars’ in each market (Beat/Sonic/Cruze/Malibu) and use Buick/Opel/Vauxhall/Holden brands to sell the ‘uplevel’ locally produced (more expensive) versions.
In order for Opel to be profitable they need to sell vehicles at higher prices than Chevrolet, so there shouldn’t be overlap if product planning is executed properly.
I don’t see how that’s possible. For example, aren’t an Aveo and a Corsa basically the same car?
The Chevy France website shows 5-door Aveos starting at €11,950. The Opel Corsa 5-door starts at €13,490. I didn’t do a direct comparison, but they seem to be quite similar.
As has been mentioned before most of the Chevy’s in Europe are ex-Daewoo cars and the Opel/Vauxhall models are Euro models. So they are different.
As Chevy gets more global models, like the 2013 Malibu, there may be some more overlap with Opel. GM may be able to do what VW has done and differentiate their mainstream brands (SEAT, Skoda and VW). Otherwise they could be like Citroen and Peugeot (or Hyundai and Kia) and have two cars competing directly against each other.
No, Aveo and Corsa are actually much different.
The Aveo looks (and is) cheaper than the corsa, expecially in the interior quality.
In short words – I’d never give my Corsa back for an Aveo.
As has been mentioned before most of the Chevy’s in Europe are ex-Daewoo cars and the Opel/Vauxhall models are Euro models
The Corsa is being engineered by Daewoo, and the plan is to share platforms with the Aveo. It is supposed to be a world car.
http://blogs.insideline.com/straightline/2010/01/chevrolet-aveo-production-car-to-share-architecture-with-opel-corsa.html
GM claims that it will be an exercise in platform sharing, not badge engineering. GM’s track record with platform sharing has not exactly been stellar, while their penchant for badge engineering has been noteworthy.
I suspect that the Corsa and Aveo will be more similar than different. It’s not as if Opel has great brand equity in Europe as does VW, so one has to wonder whether the differences will be enough for Opel to maintain a price premium.
PCH – you said “The Corsa is being engineered by Daewoo, and the plan is to share platforms with the Aveo. It is supposed to be a world car.”
Your first comment was that the Aveo and Corsa are currently the same car and myself and others have clearly stated that is not the case. Will they be linked more in the future – probably just like the Fabia/Ibiza/Polo trio from Skoda/SEAT/VW or the C1/107/Agyo Citroen/Peugeot/Toyota trio.
@SkiD666- You are right. GM has announced their global strategy to make Chevrolet their entry level brand around the world. Chevrolet is the 4th largest selling brand in the world and is growing.
GM will be the number one automaker in the world in 2011, projected to outsell second place VW by over 1,000,000 units globally and over 2,000,000 ahead of third place Toyota.
Comments denigrating GM for using the Korean design center for small cars stand in stark contrast to many who applaud the success of Hyundai and Kia, whose vehicles are developed in Korea.
Comments denigrating GM for using the Korean design center for small cars stand in stark contrast to many who applaud the success of Hyundai and Kia, whose vehicles are developed in Korea.
Nobody’s anti-Korean. But Daewoo had a dubious reputation prior to this, so suspicion is warranted.
And I’d still like to see how they’re going to make a lineup that is so distinctive from Opel that they avoid cannibalizing each other in the European market. Opel must be wondering the same thing.
@Pch101- I suppose suspicion is warranted, as I do remember the Daewoo produced Pontiac LeMans! I will never forget inheriting some Field Quality & Emissions tracking responsiblity for that car in North America as a result of reorganization of responsibilities in GM Powertrain. I should say no more about it, but I do understand!
GM has been saying they plan to position Chevrolet as the entry level, price leader nameplate, with Opel/Vauxhall more upscale and higher priced, similar to Buick here.
The relatively new “GMS” global GM manufacturing system is a far cry from the ancient Daewoo system and appears to be producing good quality in their current products.
I do remember the Daewoo produced Pontiac LeMans
Yep. And the Daewoo-badged cars were pretty lousy, and the last Aveo sold in the US wasn’t exactly a winner.
GM has been saying they plan to position Chevrolet as the entry level, price leader nameplate, with Opel/Vauxhall more upscale and higher priced, similar to Buick here.
And mid-tier branding strategies are a miserable failure in the modern era; the market is too crowded to allow for such distinctions to be maintained. Opel is not seen as a near-luxury alternative today; positioning Chevy below Opel is not going to give brand credibility to Opel.
The VW-Skoda analogy isn’t a bad one, except Opel’s reputation in Europe is not as esteemed as is VW’s. This is a recipe for taking sales away from Opel. Unless GM HQ is looking to discreetly attack its own European unit from within, I really don’t see the point.
In Korea owners changed the emblem on the car from Daewoo to Chevrolet. That is shocking if you realise how “pro-American” Koreans are
@Pch101-
GM is making a pretty good go of a mid-tier channel and has sold 280,000 high profit Buicks and GMCs in North America in the first 6 months of 2011. That volume would give the Buick-GMC channel 7th place among the 40 nameplates available here. As GM readjusts their product portfolio to deal with the death of Pontiac, the B-GMC channel’s volume and market share are likely to grow. Buick in particular is gaining market share with a limited product line.
In 2006 & 2007, before the financial crisis induced auto market collapse, the Buick-Pontiac-GMC channel sold well over 1,000,000 units each year, a volume that rivalled BMW group or Daimler group GLOBAL sales.
GM is making a pretty good go of a mid-tier channel and has sold 280,000 high profit Buicks and GMCs in North America in the first 6 months of 2011.
That’s two brands and ten models. Buick had four of those models, and sold 94,000 units, which tells you that the Buick-GMC channel is mostly a truck and SUV channel. (Does that problem sound familiar to anyone?)
Honda has sold far more Civics this year than Buick has sold vehicles. Buick doesn’t have a single model in its lineup that has outsold the Mini YTD, which is itself a low-volume niche car.
It’s a losing space. It made no sense to keep a third channel, but keep it they did. Olds was killed off when it alone had higher sales volumes than Buick does today, because those volumes were too low to justify keeping it.
I’m sorry, but I can’t see any possible way that Buick is making money from its North American operations, and those GMC trucks could have been just as easily sold as a commercial trim package at a Chevy lot — keeping it as a distinct badge sold by a separate network makes no sense at all from a corporate standpoint.
Opel is principally the “Insignia car company”, for which there is no Daewoo equivalent.
The Aveo was not particularly bad ; it didn’t catch on fire or lose wheels. Bit thirsty though.
Daewoo ahd a reputation for fairly good quality, for Korean cars actually, but it didn’t sell much in North America.
I remember the Chevrolet Vega and Ford Pinto, for that matter, if ancient history is relevant.
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!
Wasn’t there a tiff between VW and Skoda over a similar issue?
I think VW went all Hitler on Skoda.
There was.
It was documented in this finely written, engaging and, quite frankly, superb piece published on this website.
https://www.thetruthaboutcars.com/2010/03/the-skoda-conundrum/
If the Chevrolet Lacetti is good enough for Top Gear, it should be good enough for anybody.
@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
“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.
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.)
@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.
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.
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.
@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.
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.
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).
@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.