02 May 2017

GM Europe No More

Production facilities

In 1925, GM bought Vauxhall and Opel in 1929, securing a strong presence in Europe. Eventually the two competing brands were merged into one united operation, thereby moving from a competitive to cooperative arrangement. GM sold Opel/Vauxhall to PSA, the deal expected to be concluded by the end of the year.

In addition, a stake in Saab was made in 1989, and in the year 2000 it was fully acquired by GM. By 2010, GM ended its ownership of the troubled Swedish brand. In 2005 Chevrolet Europe was started to distribute cars sourced from GM's Korean subsidiary. That arrangement was abandoned in 2013 to concentrate on Opel/Vauxhall. No one realised what that 'concentrating on' would lead to.

Because the political landscape of Europe has been evolving, it's difficult to get figures that are consistent. In the year 2000 Opel/Vauxhall in Europe (without Russia) had 10.2% of the market. Sales were nearly 1.54 million. In the year 2016 sales had dropped to just under 1 million and 6.6% share.

So what went wrong, considering Ford is faring much better? My take is that a period of under investment in R&D meant product suffered and its reputation was eroded. That was being addressed but it was taking time and money. Production overcapacity and difficulties in addressing that in Europe's government meddling environment was problematic. Margins are thin for mainstream cars in Europe and I get the impression the UK was it's best market for profitability. When the pound dropped recently, that scuppered any foreseeable profit. With no end in sight for financial losses, enough was enough.

I can't say I thought GM would walk away from Europe. In hindsight, was it wise to ditch Chevrolet Korea? GM now has nothing to sell in Europe. Opel/Vauxhall will still sell there but run by a local firm. I think PSA has done well and will benefit as the current CEO seems a savvy car man. GM will be happy to rid itself of losses that just wouldn't go away.

PS. An earlier article prior to GM's sale is here: GM Wants Out.

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