Opel Could Axe New Car Prices by 40 Percent

GM Europe's German unit might turn to a surprising measure to cope with the recession, boost sales and thus, protect jobs: it might cut prices by as much as 40 percent, a report by Bloomberg.com indicates. The news surfaced after Simon Empson, managing director of Broadspeed.com, a U.K. online car retailer, explained that both Opel and Vauxhall would have to turn to aggressive marketing campaigns in order to meet their sales goals as consumers might be tempted to stay away from the two brands after the financial problems we all heard about.

“The market will be a combination of struggling brands and cheap cars," he said. “40 percent or more," he added when asked what would be the measures required to tackle the current difficult economic situation.

Opel has set a sales goal of 2 million cars per year after the company restores full production and sells vehicles at a global scale. According to figures given by Global Insight and cited by the aforementioned source, Opel currently produces 1.76 million cars a year, which means the German brand would have to boost production by more than 200,000 units.

But Magna might not agree with such an aggressive price cut, analysts indicate.

“Everybody is looking to generate cash, and the quickest but not necessarily the most effective way is to discount,” said Stefan Bratzel, director of the Center of Automotive Research at the University of Applied Sciences in Bergisch Gladbach, Germany. “Peugeot, Renault and Ford need to make sure they don’t fall by the wayside.”

Magna International already revealed some of its plans when it comes to Opel, with a production boost in Russia and Canada one of the most likely scenario. However, Magna is still days away from taking over Opel completely, as representatives of the German government repeatedly said the bid is still open to everybody.