Opel to quit China

GENERAL Motors says it will pull its European brand Opel out of the Chinese market early next year as it continues a global consolidation of brands and operations in a bid to boost profit.

Opel will halt sales of European-sourced models in China from January 2015 after failing to make gains over two years of trading in the world’s largest car market.

The company said in a statement it sold just 4365 vehicles from its 22 Chinese dealerships in 2013. By comparison, last year fellow GM brand Buick shifted 810,000 units via its 650-strong dealer network.

In the same statement, Opel said it would invest €245 million ($A364m) in its factory at Ruesselsheim, Germany, to produce two extra vehicles later this decade, with one of the new models earmarked for export to the US as a Buick.

Versions of Opel’s Insignia mid-size sedan and Mokka compact SUV are already sold in the US under the Buick name.

Opel said it would hold off on revealing more details of its plans until the end of this year “due to competitive reasons”.

Opel also revealed it would produce another undisclosed variant of the Insignia at its German plant. The German car-maker already produces four variants of the Insignia sedan and wagon range at Ruesselsheim, as well as the Zafira Tourer people-mover.

Opel chief executive Karl-Thomas Neumann said the decision to pull Opel out of the Chinese market was “long overdue”, and it made sense for GM to instead focus on strengthening its already popular Buick brand in the country.

“It would have cost hundreds of millions of euros to raise awareness of the Opel brand and to expand the distribution network,” he said. “Buick, however, is one of the market leaders in China and we plan to intensify our future collaboration, with several projects currently under examination.”

GM president and Opel supervisory board chairman Dan Ammann said the extra model lines at Ruesselsheim were part of the company’s plans to produce 23 new models and 13 new engines by 2016 in a bid to overhaul its line-up.

“With the investment in a new, additional model for Ruesselsheim, we will take another important step in our multibillion-dollar model offensive with which we will pave the way for Opel’s profitable growth,” he said.

In China, the Opel-badged line-up consists of the Astra GTC hatch, Meriva and Zafira Tourer people-movers, Antara SUV (sold here as the Holden Captiva 5) and Insignia Sports Tourer mid-size wagon.

The entire Chinese Opel range is imported from Europe, whereas GM builds Buick- and Chevrolet-badged vehicles with Chinese joint venture partners including Shanghai Automotive Industry Corporation (SAIC).

Buick’s Excelle small car, based on the same Delta II platform as the Opel Astra and Holden’s locally made Cruze, was the third best-selling passenger vehicle in China last year with 296,183 units sold, while the Chevrolet-badged Cruze also landed in the top 10 with 246,890 sales in 2013.

GM’s decision to pull Opel out of the Chinese market follows the German brand’s withdrawal from Australia last year after just 12 months on sale.

Opel’s snap decision in August to shut its 20 local dealers after selling just 1530 vehicles was made in the lead-up to sister brand Holden’s announcement in December that it would quit its Australian car-making business in 2017.

Excess Opel stock was sold off at heavily discounted prices following the brand’s withdrawal. In the first two months of this year, 350 Opels were sold in Australia, matching the brand’s sales from the same period in 2013.

Late last year, GM said from 2016 it would drop its Chevrolet brand in most of Europe after struggling to gain a foothold in the region since a re-launch in 2005.

The European economic situation and a “challenging business model” were blamed for the decision to pull out, while model sharing with Opel and its British sister company Vauxhall on vehicles such as the Mokka/Trax compact SUV and Ampera/Volt petrol-electric hybrid hatchback created brand confusion.

GM’s European arm has struggled to remain profitable in recent years in the face of the region’s economic downturn, but Dr Neumann told media at the Geneva motor show this month he believed Opel could become the second-largest car-maker in Europe within a decade.

“Why aim only for a turnaround by 2016 if we can go further and say we want to be No.2 in Europe by 2022,” he told Autonews Europe.

Volkswagen is the biggest car-maker in Europe by sales, while French company PSA Peugeot Citroen is currently second-largest.