GM to drop Chevrolet in Europe to focus on Opel

Chevrolet-EuropeGeneral Motors must be reading, as they have announced that Chevrolet will be pulled from the European car market, in order to focus on Opel (and Vauxhall in the UK), just two weeks after I wrote my article on What should General Motors do with Opel and Vauxhall in Europe?

Automotive News reported that “due to a challenging business model and the difficult economic situation in Europe” Chevrolet will no longer have a presence in Europe from 2016. “We have growing confidence in the Opel and Vauxhall brands in Europe. We are focusing our resources in mainstream Europe,” according to Stephen J. Girsky, Vice Chairman at General Motors.

Although that is exactly what I wrote in my article on Opel, that GM should focus on its local brands, in my article on How does GMs Global Brand Strategy fit in Europe? I said that they could keep Chevrolet in Europe, but make a bigger distinction between the brands. Chevrolet should be the budget brand, like Dacia, which is very successful and profitable for Renault. Daewoo was selling quite a bit of cars before it was renamed Chevrolet and raised its prices to mainstream levels for budget cars. For Dacia prices, Chevrolet would have been able to compete in Europe.

opel-mokka-chevrolet-traxBut I can imagine that GM would rather just pull Chevrolet out of the market altogether than to give it a budget image. That might hurt its image in other parts of the world, where it is a mainstream brand.

Opel’s image may have been harmed in the past years, but that was because General Motors was not focused on the brand, they even tried to sell or shut down Opel. However, Opel still has a lot of goodwill in Europe, and a lot of potential to regain the lost market share. The products and the designs are the best they have ever been and the quality has greatly improved. They just need to get their technology up-to-date, with improved fuel economy from modernized engines and lighter vehicles.

Holden-line-upNow that GM has decided to pull Chevrolet out and focus on Opel/Vauxhall, I think the brand should be able to make a comeback. I just hope that General Motors isn’t planning to pull Chevrolet out of the market in order to rebadge the South Korean made models and sell them under the Opel and Vauxhall brands, just like they are doing in Australia with Holden. Holden used to be an Australian mainstream brand, with their own designs and locally made models, in addition to rebadged Opel/Vauxhall small cars imported from Europe, like Corsa and Astra. But nowadays Holden sells mostly rebadged Chevrolets with just one local model remaining, which is struggling in the marketplace, because Holden has slipped down to a budget brand, selling the deal instead of selling the product.

They should integrate Opel/Vauxhall with Holden and Buick (in China), with Research & Development and design from Opel in Europe, producing shared models to be sold in Europe, the UK, Australia and China under their respective brands, positioned above Chevrolet in markets where they still co-exist. That way, they can take advantage of the local brands, but (semi-)global presence and economies of scale.

The timing for pulling out by the end of 2015 is not that bad at all, considering most models (Aveo, Cruze, Orlando, Captiva) will be near the end of their life-cycles and won’t have to be replaced in Europe.

After the GM marketing chief was sacked last year because he signed a $ 600 million sponsorship deal running until 2021 with Manchester United football club, he said it was clear that the deal would bring Chevrolet increased brand exposure, purchase consideration and awareness around the world worth “over four times” the sponsorship’s cost. I guess they are happy the English Premier League is viewed outside of Europe as well…..