General Motors’ decision to withdraw the Opel brand from India and concentrate on Chevrolet instead is a clear indicator of where GM’s future lies in emerging markets – and Western Europe, writes Mark Bursa.
The acquisition of bankrupt Korean automaker Daewoo Motor has turned out to be an extremely shrewd one – indeed, given GM’s financial problems both in the US and Europe, it could turn out to be the master stroke that saves the company.
It’s only been a year or so since GM was announcing the global rebranding of Daewoo as Chevrolet. At first, the idea raised a few eyebrows, especially in Europe, where there was a feeling that consumers would be unable to make the mental leap from associating the Chevy brand with be-finned 1950s American gas-guzzlers to small, affordable cars made in Korea.
In the end, that wasn’t an issue. GM’s brand strategists got it right. In Europe, Chevrolet has settled in to the market with remarkable ease. It is, after all, a brand named after its founder, whose name has European roots – Louis Chevrolet was born in Switzerland – and European consumers are familiar with car companies named after their French founders, such as Renault, Citroen and Peugeot.
Indeed, Chevrolet offers alluring possibilities for a revitalised brand strategy for GM, allowing it to move the Opel brand upmarket, with Chevrolet assuming the high-volume role on a global basis. Chevrolet gives GM something it has lacked – a world brand that is capable of competing with Ford, Toyota and Volkswagen. Last year 4.37 million Chevrolet-brand vehicles were sold worldwide, around 6% of all vehicles sold.
Already changes are starting to happen to GM’s previously haphazard emerging market brand-model mix. In Brazil, Opel Corsas have been sold with Chevrolet badges. In China, the same Corsas were sold as Buicks. In some Pacific-rim markets, US-designed Chevrolet SUVs were sold with Opel badges. The current mish-mash is being sorted out; now it’s starting to look logical.
In China, Buick has been repositioned in its rightful place as a maker of large, near-luxury cars, and Chevrolet was introduced as the volume nameplate – Chinese sales topped 100,000 units last year. The Buick Sail – a rebadged Corsa – is being replaced by the Daewoo-developed Chevrolet Aveo. The same is happening in India with Opel Corsa production ceasing in Kolkata (Calcutta) and a range of Korean Chevrolets – Aveo, OPTRA sedan and Tavera multi-utility vehicle – replacing the Corsas and Astras previously on sale. Eventually the old-generation Corsas built in Brazil will surely be replaced by Aveo derivatives too.
Where next? With Euopean sales of Chevrolet cars up 26 percent in 2005, and Korean plants running close to capacity, GM is going to need capacity for Chevrolet in the region. Last month GM entered talks with the FSO plant in Warsaw about using some of its capacity to build the cars under licence. FSO, now owned by Ukrainian automaker Avtozaz, still builds some of the older Daewoo models, and has historical links with GM, so it wouldn’t be too much of a leap into the unknown to assemble some Matizes or Aveos.
In the 1990s, GM’s European technical centre in Russelsheim was tasked with developing product for emerging markets as well as western Europe, and many in GM believe this extra burden was one of the root causes in GM’s quality problems of the time. Now, the workload is spread globally – at GM-Daewoo in Korea and increasingly in China, allowing Russelsheim to focus on European models.
The new, larger, Corsa, which debuts at the London Show in July, is a good indication of where Opel is heading. It’s bigger – and has been designed without one eye on emerging markets. A side benefit for GM is the chance to use the “pure European” Opels as the basis for its plans to rejuvenate its US Saturn brand as a distinctive, more Euro-flavoured alternative to Chevrolet.
GM’s American woes may yet drag it into Chapter 11, but elsewhere in the world, its strategy is starting to come together.