Opel, GM and the Déjà-vu

Some Saab drivers felt reminded of 2009 in the headlines of the last few days - when GM decided to close 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 The old, traditional way of thinking about playing in the forefront of every car market in the world is no longer valid.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 going back to financial strength on the one hand, no longer playing around at any price on the other, is showing success. GM CEO Mary Barra almost doubled the return on invested capital from 2014 to 2016. That you want to retire from Opel, after almost 20 years with continuous losses, there is only consistent.

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

One can not blame Opel for not having used the chances since 2009. There were good approaches. The Umparken im Kopf - campaign for example. It started quite brilliantly and could have been the start of a comeback. But even at Opel nobody could finally explain where you wanted to change what or who.

Opel would have needed a new image. But where do you get from a manufacturer who wants to do everything but can never really do that because of the lack of resources. The cars are good, they are reliable. But they do not inspire, they are average. And if something smart left the Opel factory halls, then you did not see the chances.

The best example is the small car Adam. Everything done right. Basically ! But where other manufacturers of a sales success create a whole small car family, it remained at Opel with a model. Fiat shows with the 500 how it could go, at the other end of the price list celebrates BMW 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 being wiped out. On the one hand, the premium manufacturers are robbing with light leasing rates in the area of ​​the brand with the flash. On the other side, the Koreans attack. With technology that is far more modern than the graying mediocrity of what Opel has on the shelves. And with guarantees and prices that 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 performance in the GM Group. It is difficult to assess the impact of the sale of Opel on this relatively high share. Probably, as at Saab, open contracts will 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 sit back comfortably because all the patents and rights that Opel uses are parked outside of Rüsselsheim in its own company. We remember Saab, the rights to the 9-5 NG and 9-4x. The situation at Opel is similar in this respect, and it will not be uninteresting to see what the solution for the PSA Group will look like 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, unofficial date is the 9. March 2017, then the winners could count two companies. GM would have no more losses to compensate, would have a year round billion more € in the bag. These could be distributed to the shareholders. Or you could, as industry rumors say, 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 too "Opel, GM and the Déjà-vu"

  • 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!

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

  • 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.
    Also, one may be curious who GM will be the new technology supplier without Opel ...
    How can Geely shows with Volvo.
    Hach, it's time someone revived SAAB,
    that would make more sense than PSA and Opel.

  • 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 European (GB & EU) too insecure ...

    Actually, because of the good article I do not know anything right now. A contradiction? No, because the article thank you, I know now at least what I do not know everything and why ...

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

    • 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.

      • Where are globally promising markets for Lotus and Proton?

        PSA should rather seek the trademark rights for SAAB and, if granted by SAAB AB, retain as many former SAAB professionals as possible - one would have a premium brand and the worldwide former SAAB customer base would have supplies.

        Even without a merger with NEVS, it might be possible to use the workshops in Trollhättan for the production of future SAAB vehicles. This would be another source of income for NEVS - their own premium vehicles made in Sweden are still looking for the current state of things at NEVS probably in a few years in vain. Should it be different, it would of course be welcome.

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

          • 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.

            The PSA Group still lacks a viable premium brand for both the European and other global markets - even with the modest Citroen quality you would not get here.

  • 1. Why should R'heim be closed when Eisenach is underutilized? The last simulation game of GM was to deduct the Corsa from Eisenach and complete the mocha in Eisenach. Since the cooperation of Opel and PSA is already running in Zaragoza, one can see the local factory 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.

    • 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.

      • Platforms are platforms. This is not brand specific. The VW Group shows very well how to develop and market various models in different levels on group platforms. Of course, I strongly assume that with the expiration of the current Opel models then common platforms will be developed and used. Otherwise, the connection would have no greater purpose, if you would not want to save a few euros. And in principle, only the petrolheads are interested in which platform / base comes from whom and by whom. After 2009 even GM had noticed that 17 instead of 9 (?) Of different platforms worldwide also rich. The average consumer does not care too. The main thing the value for money is right and I like it. Everything else is sound and smoke. Even vehicle names are basically overrated. What was the screaming when the then new compact car Adam should be called. Or mocha ...

  • First GM Saab drove into the Pie, now Opel is tuned. The GM managers are just great.

  • Very good article - and I'm curious what PSA at all interested in Opel. GM will probably hand over at best an empty shell, in which even the production robots only run under license. Remains only the faster market access to the east as an advantage for PSA left. And you need neither a plant in Rüsselsheim nor the local development center - especially since there is obviously no lack of development impulses in the PSA Group and ideas are implemented swiftly and quite cleverly. PSA will hardly be interested in the prototypes of inflated hatchbacks à la four-door Opel Monza. The Adam was actually the first ray of hope from Rüsselsheim - to bring a small car so completely without virtual predecessor on the market, they had probably actually believed even not ...

    • 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.

  • 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.

  • 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 ,

  • Thanks to the blogger for the informative report, which I could read only now after the holiday. Feel well informed. For PSA, the potential takeover will be more of a "profit", OPEL then has a long-term problem more ... Where is the OPEL competence?

    • Why does Opel have a problem then?

  • 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

  • A very good article!
    Basically, Opel needs nobody, neither in terms of technology nor design nor attitude to life. And if the average person really still regards the Opel brand as a "German" company, I dare to doubt it; Currently, if I see right, only three models in D are manufactured ("mounted") - the non-competitive Insignia and the Zafira in R'heim and the Adam in Eisenach.
    As long as Opel is an 100% GM-affiliate, buying an Opel would never be considered because of the Saab history - I am very vindictive.
    Although it has been said many times: If you look at how Volvo and Jaguar are experiencing a second spring, Alfa Romeo may soon be around, and on the other hand GM has "finished" at Saab, it'll make you cry.
    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.

    • If only "(technology) still design or attitude to life" were concerned, there would not be much left in the European market.

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

Comments are closed.