General Motors has no plans to give up on unprofitable Opel or axe the UK-only Vauxhall brand, international operations head Tim Lee said in a wide-ranging interview on the sidelines of the Detroit show on Monday.
“We have every intention of staying with Vauxhall,” he said, noting that the brand had a loyal following and there was no sense in starting all over re-establishing Opel in the UK – it was last sold there in the 1980s, in addition to Vauxhall.
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On Opel, he said GM had been working on a turnaround for some time.
“We have concluded – with board support – that Opel is a piece of business to turn around and make profitable.”
He said recent changes to the supervisory board and management had brought in new blood, including himself, and long-serving executive Susan Docherty, both with previous exposure to GM’s European operations, and “capable and experienced”.
Lee conceded Opel was “not profitable yet” but noted that the European market was off 2m units a year compared with pre financial crisis/Eurozone crisis volume.
“Every manufacturer [operating in Europe] is operating with surplus capacity unsustainable in the long term. We must do what other OEMs must also do, turn it around and make it profitable.”
How?
“Opel market share has remained stable. There’s opportunity there and we intend to be aggressive” especially reducing manufacturing and selling costs.
Lee referred to the all-but-done deal in the depths of GM’s Chapter 11 restructuring a few years ago to sell Opel to a consortium led by Magna International that was axed at the last minute.
“Many things done were done [in preparation for a sale] and Opel/Vauxhall we split apart [from the rest of GM Europe], were on a path to sell, and had split several functions such as warehouse/aftersales – we can win back synergy by reuniting those operations. There are significant cost saving opportunities.”
Saving Opel will come down more to good management than “outlandish sales tricks”, Lee said. “There’s opportunity after opportunity”.
Opel exports, meanwhile are ramping up. Sales to Chile and Australia (where a dealer network is being established separate from Holden) will commence within a year, some African markets, north and south, are already established, and the brand is also on sale in China.
China also gets some Opel designs lightly restyled and rebadged Buick and GM Australia has previously sold both locally made and imported Opels rebadged as Holden. Now Opel will be separate and stand-alone from any rebadged models.
“We are also looking at other markets,” Lee said.
Having said earlier that GM’s long-term policy was broadly to “build where we sell and buy where we build”, Lee said there are, for now, no plans to build Chevrolet, currently imported from Korea, in eastern or western Europe – but doesn’t rule this out in future.
“Chevrolets could be built anywhere,” he said, adding that plants, unions, assembly lines and workers “don’t care about the badge on the front, they care about units on the line”.
All unions in western and eastern Europe have asked to build Chevrolets, he noted. “They would most like to do the Volt/Ampera”.
Nonetheless, to hedge against currency movements, it can be best to source parts and build in the market but only when a proper business case can be made.
Lee looks like a good prospect to rescue Opel and write future quarterly financial results in black ink. He ran GM’s European manufacturing from 2001-6, claims to know continental union leaders well and seems to get on very well with Docherty who also has manufacturing and restructuring expertise on her resume.
Lee said the process of building GM cars is the same in all plants and vehicles built in multiple markets, like the Buicks made in the US, China and Korea are all but identical bar local market and regulatory requirements and badging – the Buick tag isn’t used on Korea’s Alpheon, for example.
On European sales picking up, he said the connection between macroeconomic indicators and consumer growth rates is inextricably linked.
“Unless economic conditions improve generally in the eurozone we will continue to be challenged by consumer confidence.”
Planned actions for Opel should return good results sustainable over time so the quarter on quarter stock price will be positively affected, improving investor confidence in the company and its strategy.
Lee said GM “had a very, very good year in 2011 and expects another good year in 2012 worldwide despite the difficulties in Europe.”
Work on fixing Opel has, after all, been ongoing for 36 months. Global brand-building (a strong focus on the millennial – 18-30s – buyer segment in the US was announced today in Detroit along with two new concepts aimed at these buyers) should bring better volumes for all GM brands and grow their market share.
Lee conceded GM had not been very successful with light commercials in some eastern European markets but expects some recovery following the launch of the new Fiat-designed and built Combo, replacing an Opel design built last in Spain after being shifted earlier from an now-closed plant in Portugal.
Model sharing with rival OEMs will continue – Lee is clearly satisfied with the “Luton vans” built at a Vauxhall plant in the UK for Opel, Vauxhall, Renault and Nissan and reminded us of the recent announcement of collaboration on battery EVs with GM’s Chinese partner SAIC Group and Korea’s LG.
Cadillac and the three goes at establishing a decent niche share in Europe over the last decade or so?
Lee made no excuses but said it is one of two GM global brands along with Chevrolet and the new plan for Europe is to launch “segment-appropriate models and grow in a thoughtful way”. That means both LHD/RHD, petrol and diesel engines but all that is still three to five years out despite last night’s launch of the BMW 3-series fighting ATS compact sedan for the US – “this isn’t going to happen tomorrow”.
He noted that the ATS was developed primarily in Germany and is “very proud of the product”.
At this point, he invites Docherty to comment: “We had stops and starts in Europe,” (she was there in ’95-’98, and acknowledges the lack of RHD and low-capacity, autobahn cruise-suitable diesels in most model lines offered).
“For ATS to be a BMW 3-series fighter, it must have RHD and credible diesel.”
And it’ll get just that when GM is ready.
