Should GM Give Up on Opel?
There are fundamental problems with Opel, starting with the fact that it’s an older company and that it’s slow to adapt to change, but though they are flawed, there’s nothing that wrong with their products. If all the cars made on Opel platforms and using Opel engines translated directly into profit, it would look great. But as it stands, Buick and Chevrolet are siphoning off the German knowhow, and the advanced technologies that are developed for the European market.
Last year, Buick was the best selling foreign brand in China. But I seriously doubt GM could have done that without the platforms from the Opel Astra and Insignia. It would be almost comical to sell an old 1997-2004 Buick Regal, with its 200 hp 3.8-liter V6, in a cost-conscious market like China. So Opel really is boosting GM’s bottom line everywhere. Everywhere except in Europe, that is.
As we know, the European auto market contracted for the fourth straight year in 2011, and it’s going to be more of the same in 2012. There are a few companies who have bucked the trend and stayed relatively flat, like Nissan who is relying on the strength of its cheap (relatively) crossovers, and the luxury makers like Audi and BMW.
The pricing environment has remained very competitive, and Opel is paying the price due to overcapacity. Because of that, you are much more likely to get a discount on an Opel than on Hyundai’s cars, since they’ve only recently stated adding new models. If you like, it’s like having a lumberjack make toothpicks - he just eats too much and isn’t dextrous enough.
Despite the fact that the losses are still piling up, Opel is doing the right thing, or at least part of the right thing. The auto alliances it’s working on will result in incremental increases in profitability, in increased savings on logistics and maybe even the dreaded job cuts. Simply put, it’s not about if they build the cars you like to buy, it’s about paying less on pensions, suppliers and retailers.
Automakers selling cars in America, especially the Japanese ones, are employing a strategy called “build them where you sell them” and GM is doing much the same thing on an European scale, by building the Astra Sedan in Russia, probably the biggest growth market right now.
GM says that it views manufacturing capacity on a global level, and so it really should stick by Opel’s side in its time of need. In my opinion, Opel is a far more recognizable car brand globally than Buick is, and more synonymous with quality than Chevrolet. So perhaps, it’s the Opel brand that should be promoted globally. After all, if a man in India has heard of a VW Golf, he also must know about the Kadett or Astra. Buick Regal - what the heck is that?
But let’s talk about the cars themselves, and what I think they should be like. Have you ever noticed how Volkswagen almost never makes a facelift, but they make incremental steps to stay competitive, every year if possible. It’s about technology, and Opel also needs to be spending more money to develop technologies that can be made global, such as standard entertainment and navigation systems (their current ones are pixelated and boring), sporty and economical DSG gearboxes for small cars, self-parking systems and active safety devices.
But it’s a fine line they have to tread: competitive markets means Opels needs to be as affordable as Kias or Hondas. At the same time, the quality needs to be put back into the cars. I don’t know if you’ve noticed, but small cars are increasingly getting big car toys. It’s a trend that can best be explained with an imaginary person. Let’s say Gustav is 50 and from Austria. He’s been driving around in the same VW Passat for the past 12 years, and when it came time to put it out to pasture, he bought a new VW Up! or Polo because he doesn’t go out of town any more.
So as to remind him of the big car he traded in, the Up! had to be just as well built and equipped, but much more economical. The Corsa might do the economy part well enough, but isn’t quite “German” enough on the inside. No matter what they did, I never completely loved Opel's interiors, and for some reason I could never shake the feeling their designers wear tweed and never read architecture and fashion magazines.
If I’m honest, fast cars play no part in Opel’s revival. But I have to take this opportunity to talk about how they are approaching this. You see, ever European carmaker has a line of fast, sporty cars, instantly recognizable and more desirable. But Opel’s lineup has just three cars, and they are all very flawed in my mind.
Starting with the Corsa OPC, this car has been using a 1.6-liter turbo since before it was cool, and that's very good. But despite its attractive looks, it never managed to feel connected, yet what they’re asking for it makes it sound like it’s the most complete package in the world - the normal Corsa OPC costs EUR 24,100 in Germany, while the Nurburgring Edition is EUR 28,100. That’s more than a MINI Cooper S!
It’s much the same story with the Astra OPC and Insignia OPC. The new Astra OPC is EUR 34,250 in its home market, which is sort of BMW 3-Series money. Meanwhile the Insignia OPC can cost as much as EUR 51,000 for an estate with an automatic. That will get you a lot of Audi A4, with S tronic and class-leading luxury.
So to sum it all up, Opels are expensive, boring, dated, thirsty and not German enough. At the same time, they have some of the best engines at GM, the most advanced platforms and the most experience making B- and C-segment cars. There’s lots to do, and not a lot of changes to get it right, so get cracking leute. All you have to do is make good cars… that’s all.