Chevrolet's European chief Susan Docherty.
Despite growing calls for General Motors to abandon its increasingly troubled Opel brand, there are no plans to replace the German-based subsidiary with Chevrolet – one of the few brands actually gaining sales and market share despite the ongoing collapse of the European automotive market.
Nonetheless, Chevy appears to be the best opportunity GM has for regaining some momentum in Europe, said Susan Docherty, the veteran executive who took over Chevrolet’s European operations last January.
From a peak of more than 17 million vehicles a year, Docherty said the European market could dip to somewhere between 14.0 million and 14.3 million in 2013, which she termed “very scary numbers.” Even so, her goal is to continue building the Chevy brand’s sales and market share. Relatively new to the European market, the bow-tie brand sold 206,000 vehicles in Europe last year and is on track for a 5% gain for all of 2012.
Chevy launches its 10th new European model, the Trax, at the 2012 Paris Motor Show.
But it’s anyone’s guess just how much worse the European situation will get as Greece struggles to line up yet another bailout and Spain reveals radical cuts in its government spending. The European car market reached a “turning” point in August, warned Docherty, with even the strongest makers posting sharp sales declines.
Few brands have racked up the declines seen at Opel, however. The century-old brand is expected to lose anywhere from $1.5 billion to $2.0 billion for all of 2012 which would be the GM subsidiary’s 14th year of red ink. GM has racked up $16.8 billion in losses in Europe since 1999 and failed to score with a number of turnaround plans.
GM Vice Chairman Steve Girsky, a former Wall Street analyst, has taken personal charge of the latest effort at salvaging Opel but few expect him to be able to implement all the details – such as closing a redundant plant in Germany – until at least 2014. That recently led Adam Jonas, the influential chief auto analyst at Morgan Stanley, to call on GM to abandon Opel.
In turn, some observers have suggested the U.S. maker might be better off to focus its European efforts on Chevrolet, its lead global brand. But for her part, Docherty said that won’t happen.
In a media roundtable during the Paris Motor Show, the executive insisted that Opel’s turnaround plan is moving ahead as it launches critical new product – such as the Opel Adam city car debuting at the Paris show. Besides, she stressed, Chevy simply is too small and limited in scope to replace the more familiar Opel.
“You need to make sure you have a brand footprint (in Europe) that makes sense,” she explained. Chevy, she added, is seen as a “very American brand,” one focused on the low end of the market. The best opportunity for GM is to pair Chevy with Opel as well as Cadillac.
That luxury brand is yet again trying to get a foothold in Europe after all but closing down in the wake of GM’s 2009 bankruptcy. It is now rebuilding a distribution base on the Continent and is pushing the new Caddy ATS as the foundation of that drive. The compact luxury sedan is being seen as Cadillac’s first credible challenge to the likes of the BMW 3-Series.
“Any turnaround starts with great product,” insisted Docherty. The Chevrolet brand is launching its 10th new model, the Trax compact crossover, in Paris. That will complement 23 new models coming from Opel over the next four years.
(Click Herefor a look at the new Chevrolet Trax.)
The overall decline of the European market might be trouble enough for General Motors but the situation has been complicated by the hefty incentives some of its competitors are offering. Docherty pointed her finger at Volkswagen which, reportedly, has been offering discounts of as much as 30% off retail on some models.
“Nobody can make money when you’ve got incentives at that level,” she warned.