What’s Wrong With Opel?

What’s Wrong With Opel?

So what’s wrong with Opel, GM’s German-European division? It’s important enough: 1.9 million sales 10 years ago, and the heart of GM’s front-drive vehicle engineering. The cars that GM builds here, like the Chevrolet Malibu, are all derived from Opel designs.

But Opel has been the big loser. GM Europe, the real Opel, lost $3.6 billion before taxes in the three years leading up to 2009, which could be another big loss. Our government, to bail out GM, is pushing it to sell. But GM’s board reversed that effort, ousting the GM president who was trying to sell it.

But the question remains: what’s wrong with Opel? Germany is a high-cost production base, and it is – most of Western Europe is. But other Volkswagen producers are also making money: Volkswagen, Fiat, and even European Ford, which make similar products for similar customers.

They all had the same problem, but they found a solution; I counted four. Let’s see how others do it.

1. Buy companies and brands in lower-cost countries. Volkswagen acquired Skoda in the Czech Republic and Seat in Spain. Renault has acquired an automaker in Romania. Fiat even took over our own Chrysler. Opel didn’t do that.
2. Shift to premium cars to profit from more expensive cars. This is Volkswagen’s main strategy, expanding Audi and acquiring Bentley, among others. Opel did not expand.
3. Compete on a global scale, especially in growing markets. Fiat is big in Brazil and Volkswagen is in China. Opel doesn’t go there.
4. Build trucks, commercial vehicles, and delivery vans. Over the years, European Ford has made more money from these cars than all its cars combined. Not an Opel. It has a small joint venture with Renault, but not many.

None of these are easy strategies, but Opel’s problems have been going on for years, so it’s reasonable to believe that GM’s Detroit manager is sitting in the German division. GM has owned Opel for 80 years, but it owns only 8 percent of its home market in Germany. Maybe that’s why there was anger there when GM changed its mind about selling Opel.

One of Europe’s best-known automotive journalists told me that Detroit GM was seen by the Germans as “the dead hand of the bureaucracy, choking Opel, and happily playing with its destiny and scope from a distance,” saying it was ” Not far from the truth.”

But GM needs a successful Opel to recover. So what can be done?

Opel is produced in Spain, Poland, and the UK (using the Vauxhall car name), but 40% of Opel production is in high-cost Germany. German unions oppose moving production abroad, and half of the supervisory board members represent labor. The supervisory board is independent under German law, something that Detroit’s GM sometimes forgets.

But VW solved the problem. Maybe it’s time for GM and Opel to look for a small company to buy in Eastern Europe or Russia to create new brands and low-cost vehicles.

A big push into the commercial vehicle business will be costly compared to established rivals like Ford and Fiat. But it’s where the profits lie, and this important market has been largely ignored for years. Time to move.

Entering large foreign markets? GM in Detroit seems to have reserved these for itself. Does it make sense for GM Opel to compete with GM Detroit in Brazil, India, or China? why not? The Germans have a certain prestige in car manufacturing. If Germany’s Opel steals GM’s sales in China, maybe it will steal more from Volkswagen or Toyota. Germans always want to move out and conquer the world: look at Volkswagen, Mercedes, and BMW. Let Opel go.

And what about the pricier line of cars? Toyota did it with Lexus. Volkswagen and Fiat do this. Yes, it’s difficult – Honda and Nissan are still struggling with their problems. But why not — something special, with a new engine, maybe a range-extended volt hybrid electric car, or something else that would separate a new luxury brand from the package?

GM is pouring nearly $2 billion into Opel to keep it going. They need to turn to some of these new strategies. Opel’s emblem is “Blitzkrieg”, a lightning bolt. It’s time for them to let the lightning strike.

One more thing: Opel’s newly appointed head is Briton Nick Reilly. He has a good record, but some say the German company Opel would run better under German leadership. Others said it was okay because the Germans knew how to follow orders.

Opel Astra – is still a saving grace for the German brand after a hot year

Opel has had a rough year, with former owner General Motors selling it to the French hands of the PSA Group (which owns Peugeot and Citroen), and some of its new models (Insignia Grand Sport, Crossland X) dropping just a bit flat in key ways.

Thankfully, Opel still has Astra, one of the best cars in the competitive family hatchback class. It’s one of those rare mass-market cars that feels over-engineered, with great cabin quality and a compact, well-applied build quality.

The cabin also looks good and is very roomy. It’s also good to drive, very good in fact, with light, almost refined steering and an enthusiastic attitude towards cornering.

The Estate Edition is very roomy and quite handsome (it’s better looking than the hatch), the only downside to having the Astra is a tiny fuel tank, which limits long-distance travel a bit.

Best car: SRi 1.0 105hp Turbo Stop/Start from: €20,750 Finance package from €276 CO2 emissions: 90-128g/km Summary: Opel’s best current offerings (in miles)