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Is GM letting Opel slip away?

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IOL mot jul17 opel

In the early eighties, Opel replaced Chevrolet as the GM passenger car brand in South Africa because the parent company wanted its cars to wear their correct badges and by that time our Chevys were more renamed Sauerkraut than Levi's and apple pie.

Then as much as the passing of the bowtie did not go unmourned, it wasn't long before Opel was bragging about its own success story in South Africa.

Interesting how history's done an about-turn. In recent years a resurgent Chevrolet (hailing from a global gene pool) has taken back its role as GMSA's brand for the masses while Opel's been whittled down to an upmarket niche brand that only sold 211 cars last month (versus Chevrolet's 3807).

It appears Opel's also in some trouble overseas. In fact, according to a recent report by Reuters, industry observers are beginning to ask if it's time to start writing Opel's epitaph.

After almost selling the brand to Magna three years ago but then changing its mind at the last minute, Opel has racked up R29-billion in underlying losses.

The Reuters report attributes this to “an ever-shrinking European car market, a bloated fixed cost base and an image that GM has helped bring low.”

In fact, Opel's market share in Germany has shrunk to record lows this year.

Last week Opel lost its CEO Karl-Friedrich, who officially resigned although many reports are calling it a sacking. This comes just a month after the GM division announced a deep restructuring strategy aimed at getting Opel back into the black.

So where did it all go wrong for Opel?

Sure, we could blame the European economy, mismanagement and all sorts, but what if the answer lies in Opel trying to be something its not?

A few years ago, a GM representative told me that Opel is gunning for the premium market, perhaps even above where VW pitches its tent.

That's far cry from what Opel was in the '80s and '90s when it made cars that were relatively affordable, yet sporty and offering good performance for the price. On the local scene, even your basic Kadett offered a fun package for a minimal outlay and who could forget South African specials like the giant-killing Superboss or that equally mad torque steer extravaganza called the 200ts?

Opels were a lot of good things but they were not upmarket. Don't get me wrong, Opel makes some great cars today, but they're priced at the top step of their segment ladders and sales figures imply that Opel hasn't quite pulled the whole “we're going premium” thing off quite like VW has.

On the other hand there are some sensible reasons for Opel taking a swim upstream. For starters, it leaves space for Chevrolet to occupy the more affordable end of the spectrum. Today's Opels also share most of their parts and components with another upmarket GM brand, Buick (which is big in China), and those economies of scale must surely help the balance sheets.

Yet I suspect that if Opel wants to succeed in the premium game, its products need to be even more convincing than they are today - and the world needs to be trained to think that an Opel badge is worth paying more for.

That, to me, sounds like a bigger gamble than taking a step or two closer to its roots.


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