General Motors is to make Chevrolet Europe a niche division from 2016 with the volume models currently sourced from Korea to be discontinued. The move is expected to cost the automaker up to US$1bn.

"The company’s Chevrolet brand will no longer have a mainstream presence in western and Eastern Europe, largely due to a challenging business model and the difficult economic situation in Europe," GM said in a statement.  

Models such as the US-made Corvette will remain available in western and eastern Europe and the mainstream Chevrolet models will continue in Russia and the Commonwealth of Independent States.

Chevrolet is currently ranked fifth in Russia after Lada, Renault, Kia and Hyundai.

"This will improve the Opel and Vauxhall brands and reduce the market complexity associated with having Opel and Chevrolet in Western and Eastern Europe. In Russia and the CIS, the brands are clearly defined and distinguished and, as a result, are more competitive within their respective segments," GM said.

There is already some overlap between mainstream Chevrolet and Opel/Vauxhall in the B-SUV segment where the Trax and Mokka, respectively, are essentially the same Korea-sourced model.

The range extender Chevrolet Volt and Opel/Vauxhall Ampera are also different only in detail and there are similarities in large SUVs.

Compared with Opel/Vauxhall, Chevrolet - relaunched with the additional Korean models in 2005 - has seen much lower annual sales volume in Europe of only about 200,000 units.

Year to date in the EU and EFTA markets its sales were off 17% year on year to 152,260 vehicles for a 1.2% market share. Opel/Vauxhall saw a 3% decline to 718,829 units for a 6.7% share.

November UK sales data for the UK just in today shows Chevrolet YTD volume off 13.5% to 13,040 units (0.68% share) compared with Vauxhall's rise of 10.3% to 215,983 and 11.24% share.

IHS Automotive has forecast GM production in Korea will fall 20% in 2015 compared with 2013.

GM has had several unsuccessful attempts already at expanding Cadillac sales in Europe. It now said the brand, finalising plans for expanding in Europe, "will enhance and expand its distribution network over the next three years as it prepares for numerous product introductions".

“Europe is a key region for GM that will benefit from a stronger Opel and Vauxhall and further emphasis on Cadillac,” said GM chairman and CEO Dan Akerson. “For Chevrolet, it will allow us to focus our investments where the opportunity for growth is greatest.”

Chevrolet said it would work with dealers so it can honour obligations to existing customers in the coming years.

“Our customers can rest assured that we will continue to provide warranty, parts and services for their Chevrolet vehicles, and for vehicles purchased between now and the end of 2015,” said Chevrolet Europe president and CEO Thomas Sedran.

“We will continue to become more competitive in Korea,” said GM Korea president and CEO Sergio Rocha. “In doing so, we will position ourselves for long-term competitiveness and sustainability in the best interests of our employees, customers and stakeholders, while remaining a significant contributor to GM’s global business.”

The cost of axing mainstream Chevrolet across Europe will be high. GM expects to book special charges of $700m to $1bn mostly in the fourth quarter of 2013 and into first half of 2014.

The special charges include asset impairments, dealer restructuring, sales incentives and severance-related costs. Other restructuring costs will not be treated as special charges but will affect GM International Operations profits in 2014.

GM recently axed the Opel brand in Australia after barely a year. However, the 22 affected dealers, many of whom had built dedicated premises, praised the company for the way it handled compensation estimated at around $A40m.

GM's announcement came the same day rival Ford said it would start selling the Mustang - its rival for the Camaro - in Europe for the first time in the nameplate's almost 50 year history.

See also: COMMENT: GM bites the bullet on Europe

Show the press release

GM Strengthens its European Brand Strategy

2013-12-05

 

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  • Opel/Vauxhall to compete as GM’s mainstream brands across Europe
  • Chevrolet to focus on iconic products in Europe
  • Cadillac to expand in Europe

 

Beginning in 2016, GM will compete in Europe’s volume markets under its respected Opel and Vauxhall brands. The company’s Chevrolet brand will no longer have a mainstream presence in Western and Eastern Europe, largely due to a challenging business model and the difficult economic situation in Europe.  

Chevrolet, the fourth-largest global automotive brand, will instead tailor its presence to offering select iconic vehicles – such as the Corvette – in Western and Eastern Europe, and will continue to have a broad presence in Russia and the Commonwealth of Independent States. 

This will improve the Opel and Vauxhall brands and reduce the market complexity associated with having Opel and Chevrolet in Western and Eastern Europe. In Russia and the CIS, the brands are clearly defined and distinguished and, as a result, are more competitive within their respective segments.

Cadillac, which is finalizing plans for expanding in the European market, will enhance and expand its distribution network over the next three years as it prepares for numerous product introductions.

“Europe is a key region for GM that will benefit from a stronger Opel and Vauxhall and further emphasis on Cadillac,” said GM Chairman and CEO Dan Akerson. “For Chevrolet, it will allow us to focus our investments where the opportunity for growth is greatest.”

“This is a win for all four brands. It’s especially positive for car buyers throughout Europe, who will be able to purchase vehicles from well-defined, vibrant GM brands,” Akerson said.

Chevrolet will work closely with its dealer network in Western and Eastern Europe to define future steps while ensuring it can honor obligations to existing customers in the coming years.

“Our customers can rest assured that we will continue to provide warranty, parts and services for their Chevrolet vehicles, and for vehicles purchased between now and the end of 2015,” said Thomas Sedran, president and managing director of Chevrolet Europe. “We want to thank our customers and dealers for their loyalty to the Chevrolet brand here in Europe.”

The majority of the Chevrolet portfolio sold in Western and Eastern Europe is produced in South Korea. As a result, GM will increase its focus on driving profitability, managing costs and maximizing sales opportunities in its Korean operations as the company looks for new ways to improve business results in the fast-changing and highly competitive global business environment.

“We will continue to become more competitive in Korea,” said GM Korea President and CEO Sergio Rocha. “In doing so, we will position ourselves for long-term competitiveness and sustainability in the best interests of our employees, customers and stakeholders, while remaining a significant contributor to GM’s global business.”

With the decision that Chevrolet will no longer have a mainstream presence in Western and Eastern Europe, GM expects to record net special charges of $700 million to $1 billion primarily in the fourth quarter of 2013 and continuing through the first half of 2014. The special charges include asset impairments, dealer restructuring, sales incentives and severance-related costs, and will pave the way for continued improvement in GM’s European operations through the further strengthening of the Opel and Vauxhall brands. Approximately $300 million of the net special charges will be non-cash expenses. In addition, GM expects to incur restructuring costs related to these actions that will not be treated as special charges, but will impact GM International Operations earnings in 2014.

Original source: GM