GM Loosens Opel Reins

Opel to be sold beyond Europe

General Motors is down to managing four brands in North America now that Pontiac, Saab, Saturn and Hummer have been sold or shut down.

Cadillac, GMC, Chevrolet and Buick comprise its North American brands, but the company also owns Holden (Australia), Daewoo (Korea), Vauxhall (UK) and Opel (Europe). Holden and Daewoo are sold beyond their local markets, but Opel is not. Vauxhall is Opel in the UK and other markets, selling the same models under a different brand.

Up until now, Opel has been sold only in Europe. Its cars, which have been reworked and sold in the United States as the Saturn Astra, Buick Regal and Chevrolet Cruze, are a good fit for other markets, but GM has kept tight reins on the brand. However, that is about to change.

Opel Initiative

According to Crain Communication’s Automobilwoche (Automobile Week), a sister publication to Automotive News, Opel will soon be sold in China. GM has been enjoying a booming success in China where its Buick brand is a national darling. Chevrolet is sold there too as are some Daewoo products.

Interestingly, Australia is another market where the Opel brand is slated to be sold. That’s Holden territory, but the products likely to be sold down under should be different. Indeed, although the Opel Astra inspired the Holden/Chevrolet Cruze, they are not the same cars. Conceivably, Opel could sell the Astra there too.

Other Markets

Opel will also be selling its cars in two unidentified South American market and one unnamed Asian market besides China. Likely, some of those models will compete against existing GM brands which could present a problem for GM if the Opel introduction isn’t carefully managed.

Following its 2009 bankruptcy filing and reorganization, the General Motors Company has been on a fast track to remaking itself.  In North America and elsewhere, capacity has been realigned to match demand, reducing model availability to their lowest levels in memory.

Opel China

Opel isn’t entirely knew to China as Automobilwoche reports that its cars have been on sale there since mid-2009, with 4,000 units sold. That’s chump change in the world’s largest consumer market, something GM will rectify when the import reins are loosened.

Expect GM to continue to look at new markets for Opel, but the United States and Canada won’t be considered. GM has learned its brand management lesson and is doing what it can to bolster its four surviving North American brands.

Is 17 Million Annual Car Sales Possible?

During the lowest point of the recession, some automotive industry analysts were declaring that the era of robust auto sales for the United States was over. After peaking at 17.4 million annual units sold in 2000, sales gradually slid over the decade until plunging in 2008 and finally bottoming out at 10.4 million units for 2009.

Annual Sales

In the course of the recession, the US lost its long held position as the top car consuming country in the world, as China saw its sales surge in the face of an American retreat. Few are predicting that sales will return to previous levels at least in the next few years with some saying that 12-13 million annual sales is the most likely scenario, effectively becoming the “new normal” for the country.

Fortunately, that position is not universally held.

According to The Wall Street Journal, the management consultant firm A.T. Kearney, Inc. has issued a much more positive projection from 2012 and beyond even as sales are likely to climb to just 11.7 million units for 2010.

Optimistic Predictions

For 2012, Kearney is predicting US sales to reach 16.8 million units, 17.8 million in 2013 and 18.6 million in 2014. These sales numbers are the company’s “optimistic” predictions with their “pessimistic” numbers reflecting 12.9 million sales in 2012 followed by consecutive 14.6 million units sold in 2013 and 2014.

Even with baseline sales of 16.1, 16.5 and 17.5 million units in 2012, 2013 and 2014 respectively, few analysts are predicting that the 16 million unit threshold will be reached before 2013. Still, mostly everyone, including Kearney believes that pent up demand will bring customers back in to dealer showrooms. And, though cars tend to last much longer these days, the number of people with cars ten years or older is skyrocketing. Those people are seen as contributing to stronger sales in years ahead.

Outside Forces

Auto Trends doesn’t make predictions based on anticipated sales data, given the vagaries of the economy and other market conditions that may weigh in. The national debt is at an all time high level and taxes are bound to increase as national health care is introduced and other funding mandates arrive.

Finally, as A.T. Kearney partner Daniel Cheng noted, economic problems in Europe and elsewhere or terror threats could diminish the auto industry’s hope for a strong recovery, perhaps making everything I’ve written here moot!

GM: Saab Sells, Hummer Sinks

The demise of Hummer, promising smaller models including this concept Hummer Hx will die with the brand.

For General Motors three out of four will have to do.

Four is the number of brands GM has been working on getting rid of, but three represents the number of those same brands that the company will end up closing down. On Tuesday, GM completed the sale of Saab to Spyker, but on Wednesday the automaker announced some bad news: its Chinese buyer for Hummer was backing off from the deal. As a result of the canceled deal, GM will begin to shut down Hummer. Pontiac and Saturn represent the two other brands deep-sixed by GM.

Not Approved

Sichuan Tengzhong Heavy Industrial Machines Company, the proposed buyer for Hummer was a long shot for the brand anyway. As a maker of heavy duty equipment the company had no experience with automobiles. The Chinese government was never too keen about the deal, effectively nixing it by not extending their approval.

In the Feb. 24, 2010 issue of “The New York Times,” GM simply reported that the $150 million deal “cannot be completed.”

Once Hummer is out of the way, GM will be able to concentrate on its four core US brands—Cadillac, Buick, GMC and Chevrolet—as well as its foreign brands which include Holden, GM Daewoo, Opel and Vauxhall. At one time Hummer represented a highly profitable niche brand for GM but the military themed sport/utility vehicle brand was also criticized for producing cars known for their girth and lack of fuel efficiency.

Moving Forward

GM offered a one paragraph news release announcing the canceling of the deal and the closure of Hummer. As many as 13,000 jobs may be affected by the brand’s demise as that number includes a number of dealership positions. GM says that they will continue to honor Hummer warranties while also making available Hummer parts.

Like Hummer, Saab had also been for sale and appeared to headed to dissolution when its original buyer, Koenigsegg, backed out late last year. As GM announced that Saab would be shut down, Dutch exotic car maker Spyker expressed interest in buying the Swedish automaker. That deal nearly collapsed as well until GM announced in late January that they had reached terms with Spyker. Spyker then began to fast track the Saab sale through the European Union system gaining quick regulatory approval before closing on the deal this week.

In other GM news, the automaker announced that a third shift will be added to their Lordstown, Ohio plant in order to accommodate production of the compact Chevrolet Cruze. As a result of that decision, some 1200 jobs will be added, bringing the worker total there to 4500.

Source: General Motors