Opel, GM and the Déjà-vu

Some Saab drivers felt reminded of 2009 by the headlines of the past few days - when GM decided to shut down Saab for good. A déjà vu? Only superficially, because 2017 is not 2009 and things have changed fundamentally.

Opel, GM and the Déjà-vu

GM 2017 is not GM 2009

GM is no longer the company it was in the year 2009. At that time, one acted on the abyss, today one acts from a position of financial strength. The old, traditional way of thinking about playing in the forefront of every car market in the world is no longer valid. Almost unnoticed, GM has moved away from markets that do not generate revenue. In Russia, Australia, Indonesia and Thailand, the activities were shut down. Investments in India and Brazil are under scrutiny.

The strategy of returning to financial strength on the one hand and no longer playing along everywhere at any cost on the other is showing success. GM CEO Mary Barra nearly doubled its return on capital employed from 2014 to 2016. It is only logical that they want to withdraw from Opel after almost 20 years with continuous losses.

Opel. Re-park in the head. But where?

You can't blame Opel for not taking advantage of the opportunities since 2009. There have been good approaches. The parking in your head - campaign for example. It got off to a brilliant start and could have been the beginning of a comeback. But in the end, nobody at Opel was able to explain what or who to move to where.

Opel needed a new image. But where do you get it from a manufacturer who wants to do everything, but can never do it really well due to a lack of resources. The cars are good, they are reliable. But they don't inspire, they are average. And if something smart did leave the Opel factory, then you didn't see the opportunities.

The best example is the Adam small car. Everything done right. Basically ! But where other manufacturers created a whole family of small cars from a sales success, Opel stayed with one model. With the 500, Fiat shows how it could work, at the other end of the price list, BMW is celebrating the Mini.

While GM changed, sentimentalities set aside and decreed for profitability, Rüsselsheim fell back into old habits. On the list of self-registrations Opel permanently occupies the first places. Almost 50%, every second Opel, is pushed into the market as a proprietary or dealer approval. That is not healthy, and the way to recovery of the brand is not at all. What good is it if you offer premium-class features in the compact class, but then squandered cheap?

Opel is worn out. On the one hand, the premium manufacturers rob the brand with the lightning bolt with low leasing rates. On the other hand, the Koreans attack. With technology that has long been more modern than the grayed-out mediocrity that Opel has on the shelves. And with guarantees and prices that you have nothing to oppose.

The Vauxhall and Brexit problem

Companies that disappear from the market have excuses. It is then always due to unforeseen events that occur suddenly and unexpectedly, which hit weak, troubled brands particularly hard. One of these events is the Brexit.

Opel operates two Vauxhall works on the island. 4.500 people are on payroll, 85% of UK-built vehicles are exported. If the island leaves the EU with the announced hard Brexit, then for the low-profit compact cars on import into the EU 10% of dues become due.

The Opel sister brand Vauxhall is the number 10 in Britain with 2% market share. Since the Brexit vote, the market is weakening, sales are steadily declining and, in return, discounts are rising.

The exit. Questions and risks.

Opel is responsible for 12% of the annual development work in the GM Group. It is difficult to assess what effects the sale of Opel, with this relatively high share, will have. As was the case with Saab, open orders are likely to be completed. Then the relationship is ended.

On the production side it looks relaxed for GM. The real models of success in the corporate mix do not come from Opel factories, they roll out of Korean factories. The Opel Mokka is a Buick Encore from Korea, which provides huge quantities in China and North America.

GM can lean back comfortably because all patents and rights that Opel uses are parked in their own company on the other side of Rüsselsheim. We remember Saab, the rights to the 9-5 NG and 9-4x. The situation at Opel is comparable in this respect, and it will not be uninteresting to see what the solution will look like for the PSA Group as a potential buyer.

Profiteers and losers

With the entry of PSA it could come to the clear cut in the German works. The most expensive location at Opel is the main plant in Rüsselsheim. With over € 50,00 per hour per employee, production is more expensive than in any other plant, even more expensive than in the French PSA factories. Relatively cheap is England, with something over 20,00 € for the wage hour. Nevertheless, it is considered agreed that one of the two factories is settled.

The employees in the Polish Opel plant need hardly worry. The wage hour is just under 10,00 € and is the cheapest in the European comparison.

If the sale takes place, the unofficial date is March 9, 2017, then two companies could be among the winners. GM would no longer have to compensate for losses and would have around a billion euros more in its pocket every year. That could be distributed to the shareholders. Or, as industry rumors say, you could join FCA (Fiat Chrylser).

Extremely quiet behaves another actor. Dongfeng is involved with 14% in PSA, a German brand would certainly not be wrong to the Chinese. In Rüsselsheim, one could then develop for China. As do former Saab engineers in Gothenburg at CEVT. Or at Dongfeng, in Innovatum in Trollhättan. Which almost closed the circle again. Because Dongfeng was traded in the last few days as a possible, another shareholder in NEVS.

A rumor, of course, maybe a déjà vu. And definitely unconfirmed.

22 thoughts on "Opel, GM and the Déjà-vu"

  • blank

    A very good article!
    Basically, nobody needs Opel, in terms of technology, design, or lifestyle. And whether the average person actually still regards the Opel brand as a “German” company, I dare to doubt; At the moment, if I see correctly, only three models are being produced (“assembled”) in D - the non-competitive Insignia and the Zafira in R'heim and the Adam in Eisenach.
    As long as Opel is a 100% GM subsidiary, I would never consider buying an Opel because of the Saab history - I'm very resentful.
    Even if it has been said many times: When you look at how Volvo and Jaguar are experiencing a second spring, possibly soon also Alfa Romeo, and what on the other hand GM has “done” at Saab, tears come to you.
    In short, those at GM just can not, at least not in Europe. And that's why Opel will remain a tragedy under GM's wing.

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      When it comes to “(...) technology, design, lifestyle." If it were possible, there wouldn't be much left on the European market.

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        That's how it is.
        Which brings us back to the lost brand from the far north ...

  • As can be read in the daily press, there is again the usual Zankbereiche if GM wants to sell something. GM wants to get a lot of money for Opel. In addition PSA is to pay for the current vehicle fleet expensive license fees (as usual all licenses GM and not Opel, also if developed there), and / or PSA is not to be able to get all licenses, and of course GM wants the marketing of the mark Opel in different markets like Ban America, China or Russia in the future. Everything as usual. GM once again wants to sell a relatively empty shell very expensive. I think it is foreseeable that PSA will soon back down. Let's see how then the Opel story goes on

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    Thanks to the blogger for the informative report that I was only able to read after the vacation. I feel well informed. For PSA the possible takeover will be more of a “profit”, OPEL then has one more problem in the long term ... Where is the OPEL competence ???

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      Why does Opel have a problem then?

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    So I believe that a takeover of Opel by PSA has more positive than negative sides.

    There were times when Opel did benefit from being part of GM. However, that was in the 50er, 60er and 70er years, as came from the GM design studios again and again brilliant impulses, which were implemented by Opel with models such as the Rekord C, the GT or the KAD series. At some point, however, came the problem that the only thing that came from the parent company was cost pressure, which became noticeable in ever poorer quality of the vehicles.

    Another problem that I see is that GM management at some point has no longer understood Europe and the other demands on vehicles and simply did not want to deal with it. You could also see that well at Saab. The big corporation could not or did not want to realize that brands have to keep their idiosyncrasies in order to be successful in the market. It was grafted American opinions European brands and basta.

    Since PSA is a group that always comes back with interesting ideas around the corner and on the other hand, the European requirements for vehicles know much better estimate, I see it as an opportunity rather than a threatening event for Opel, if the acquisition would come about ,

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    Yes, it's really exciting and I'm curious to see what conditions GM passes on to PSA. It will certainly be difficult with the technology. It will be interesting for the small car in the new group. Peugeot and Citröen have a lot to offer here only to the upper class is doing in Germany heavier, here you could possibly benefit from Opel something (if GM permits). At first I will say that all the works will remain, but in two years' time something will surely happen here and some works will be closed down. In England, the question then arises as to whether a work is really worth it or whether it is not completely sealed. Even in Germany it will be difficult to keep all the works.
    The trend is rather in the Asian area and I do not think that you will hardly use the plants in Europe to then export to Asia. Malaysia would certainly be a more interesting location.

    For Opel, in the medium term, it will be difficult. Small car competence is more likely with PSA, for the Asian region rather expensive and not exclusive enough. Citroen has a better reputation especially with the DS models in China while Opel is not known there. It will then almost depend on whether you continue to recognize Opel in Germany as a German brand or not. But maybe PSA leaves the engineers more freedom to use.
    I think that's good for Opel.

  • blank

    Very good article - and I'm curious to see what interests PSA in Opel. At most, GM will hand over an empty shell, in which even the production robots only run under license. All that remains is the faster market access to the east as an advantage for PSA. And for this you don't need a plant in Rüsselsheim or the development center there - especially since there is obviously no lack of development impulses in the PSA Group and ideas are implemented quickly and very cleverly. PSA will also have little interest in the prototypes of inflated hatchback sedans like the four-door Opel Monza driving around here. Adam was actually the first ray of hope from Rüsselsheim - bringing a small car onto the market without a virtual predecessor was something they probably didn't believe in themselves ...

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      What does PSA want with Opel? The answer is simple: market share increase from just under 10% to almost 17% and thus again second place with a big lead over Renault, who are third with 10%. Reduction of costs is a positive side-effect, which then sets in later.

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    First GM drove Saab into the pie, now it's Opel's turn. The GM managers are simply great.

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    1. Why should R'heim be closed when Eisenach is not being used to capacity? The last simulation game from GM was to withdraw the Corsa from Eisenach and manufacture the Mocha completely in Eisenach. Since the cooperation between Opel and PSA is already under way in Saragossa, the plant there can be seen as set.
    2. The English works are both not particularly there. Ellesmere Port only builds the Astra, which in principle could be built entirely in Poland. Cheaper are the poles definitely. The issue of import tax would be solved. Luton as the second plant builds only the Vivaro, which is based on Renault. I assume that on LCV the current Renault alliance will be solved after the expiration of both model ranges and until then a new large and medium LCV follows on PSA basis or the already small alliance with FCA is developed. Production of LCV then most likely in PSA factories. Luton would be out of it.
    3. Adam and the missing family. The previous plan provided for an 4 door for 2018 and 2019 / 2020 for model renewal including a CUV. I assume that one was surprised at Opel by the success of Adam himself, but in recent years simply not enough funds to expand the series, because you had other sites that had to be processed more urgently (Astra, Insignia). What will be left over from the previous planning to 2020, will show the time.

    • blank

      Very fine article!

      Rüsselsheim will surely survive as a development location. The extensively rebuilt last year, the test center in Dudenhofen is not far away.

      And with the English you have to see how hard they really pull through their Brexit.

      As far as the Adam is concerned, the plans will be ripe for the trash at the latest when selling 2020. PSA has the larger small car Kompentenz, which need no Opel platform. The next Adam appears on a base from France.

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        Platforms are platforms. First of all, that's not brand-specific. The VW group shows very well how various models can be developed in different levels on group platforms and brought to market. Of course, I strongly assume that when the current Opel models are phased out, common platforms will be developed and used. Otherwise the connection would have no greater purpose if you didn't want to save a few euros. And in principle only the petrolheads are interested in which platform / base comes from whom and by whom it was used. Even GM had noticed after 2009 that instead of 17 (?) Different platforms worldwide, 9 would be enough. The average consumer doesn't care either. The main thing is that the price-performance ratio is right and I like it. Everything else is smoke and mirrors. Even vehicle names are generally overrated. What was the cry when the then new small car was to be called Adam. Or mocha ... 😉

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    Thank you, Tom!

    That was unexpected - even incredible - fast and has become a very substantial overview.

    You can really be curious if this merger will be brought to an end and how exactly will this then
    looks. Or where she could lead in perspective. Difficult to classify and estimate all this at the moment.
    Too many players, too global and too insecure at European level (GB & EU) ...

    In fact, because of the good article, I don't know anything right now. A contradiction? No, because thanks to the article, I now at least know what I don't know and why ...

    That's a lot more than I knew about it yesterday!

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      With pleasure! Of course, our insight into the world of PSA is too small to analyze where the company wants to go. It is exciting to see that PSA is not only in Germany on a shopping spree. In Malaysia, Proton and Lotus are on the list. What also Geely / Volvo should be interested in. The industry is facing big changes.

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        Where are globally promising markets for Lotus and Proton?

        PSA should rather seek the trademark rights for SAAB and, with permission from SAAB AB, include as many former SAAB specialists as possible in the group - you would have a premium brand and the worldwide former SAAB customer base would have replenishment.

        Even without the merger with NEVS, there might be the option of using the factory in Trollhättan for the production of future SAAB vehicles. This would be another source of income for NEVS - according to the current state of affairs, you will probably look in vain for your own premium vehicles made in Sweden at NEVS in a few years' time. Should it turn out differently, it would of course be welcomed.

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          Proton would be a further expansion to Asia and makes sense in growing markets. PSA can only benefit from it.

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            A further expansion to Asia sounds good at first - on the other hand there are so-called mass-produced goods (Proton is by no means premium) for the Asian markets now in abundance.

            As before, the PSA Group lacks a usable premium brand for both European and other global markets - even with the modest Citroen quality, you wouldn't get any further here.

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    It will be interesting to see what PSA intends to do with Opel.
    That unfortunately it will come to plant closures and layoffs, you do not have to be a prophet.
    It will also be interesting to see who will be the new technology supplier for GM without Opel ...
    How can Geely shows with Volvo.
    Hach, it's time someone revived SAAB,
    that would make more sense than PSA and Opel.

  • blank

    Super interesting backgrounds that I as a layman would never have on the screen.
    That could shake up the European market.

  • blank

    Very good! So much about Opel would be fine. In the case of self-registrations, you are in the front seats month after month, and most often the number 1. Very good and fair article!

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