For a small hatchback, the Astra that goes on sale in two weeks will carry some weighty goals for General Motors’ European business, including higher sales, higher market share and an end to four years of losses.
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According to a Reuters report, GM executives see the five-door Astra and the variants coming over the next several months as their best shot in years at reclaiming buyers who have defected from GM’s mainstream European Opel and UK Vauxhall brands over the past few years.
They have reportedly set a target of selling 500,000 Astras annually by 2005, compared with about 300,000 last year, and they believe mis-steps by Volkswagen with the new version of its best-selling Golf may have given them an opening.
“We believe we are very well set up for 2004 to gain market share,” Opel chairman Carl-Peter Forster told Reuters at a press presentation of the new car on Thursday evening, adding: “We believe with the Astra launch we are exactly spot-on – not only with the product and the pricing, but also with the timing.”
The news agency noted that the Astra competes in Europe’s compact car segment, which accounts for about 30% of the market or some six million vehicles annually. Within that segment, buyers in recent years have been moving from traditional hatchbacks and wagons to compact minivans such as the Opel/Vauxhall Zafira and Renault Megane-derived Scenic, which offer more space for similar prices.
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By GlobalDataThose changes have played out against a sluggish European market with falling prices, higher currency costs and more competitors entering the fray, the report added.
Reuters said GM Europe blamed those conditions for missing its earnings targets last year, posting a loss of $US286 million, excluding some $218 million in restructuring charges.
GM hopes to break even in Europe this year, with a return to profits in 2005, targets GM chairman and chief executive Rick Wagoner called essential to meeting the company’s goal of earning $10 per share by mid-decade, the report added.
Reuters said the new Astra is the first GM car to be developed entirely under the direction of Forster, the former BMW executive who became head of GM Europe’s Adam Opel division in 2001.
When Forster arrived, GM was wrestling with how to build small cars as cheaply as its Japanese competitors and considered using the same platform for small cars in North America and Europe, but the plan proved too unwieldy for all the necessary combinations of engines and transmissions, the news agency’s report said.
Reuters added that Forster and GM Europe executives faced a choice – either wait for an all-new platform for the next Astra or to use pieces of the old Astra as building blocks for a new version that would reach markets faster, around the same time VW rolled out a new version of the Golf.
Forster chose the faster option and, Reuters said; as a result the new Astra took about 19 months to develop, the shortest time ever for such a high volume vehicle in GM Europe.
While the new Astra shares about 10% of its parts with the old model, its styling has been overhauled for a sportier look, with intricate headlamps and tail lights, and its ride massaged with high-tech suspension controls, the report added.
The redesign also reportedly allowed GM to add a third diesel engine option to the Astra, a 1.9 litre from its joint venture with Fiat Auto. Reuters noted that GM has lagged the European market’s shift toward diesel engines, and executives said the new engine would help GM eventually sell half the new Astras with diesels.
According to Reuters, GM may also be poised to capitalise on VW’s mistakes because early sales of the new Golf launched in October have run below plan, and VW has turned to offering free air conditioning to boost sales.
GM executives reportedly say the Golf may be suffering from cannibalisation from other VW models, conservative styling and prices about €400 higher than similar versions of the Astra.
If there’s a cloud in GM’s sunny outlook, it’s the worry that the Golf’s troubles reflect a weakness in the overall market, Reuters noted. Wagoner reportedly said he was concerned about “a lack of enthusiasm” about economic growth in Europe, and said lower interest rates would be a welcome relief.
“The auto industry in Europe is not very profitable right now, and everything that I see suggests its going to get more competitive, not less,” Wagoner told the news agency, adding: “Add that to an incredible regulatory burden…and it suggests, boy, we need some economic growth to provide some fuel here.”
