European Concerns Drive GM, But Beware Of The French Connection



GM's bid to rationalize Europe will impact the products that will be offered domestically.

It seems that Europe is defining the future of General Motors more so than its home North American market. Having axed Saturn, Pontiac and Hummer, GM has done a fairly good job of repositioning its remaining four divisions, Cadillac, Chevrolet, Buick and GMC. Cadillac carries the luxury banner. Chevrolet is aimed at the masses with cars and trucks along with a nod to performance thanks to Camaro and Corvette. Buick bridges the premium gap between Chevy and Cadillac, while GMC offers a hardcore work/upscale proposition.

But recent moves by GM show that many of its decisions are influenced by European competitors, as well as the company's desire to get its house in order on the other side of the Atlantic. Europe continues to bleed cash and GM's bid to rationalize those operations will have an impact on the types of products that will be offered domestically.


Matt DeLorenzo is the former editor-in-chief of Road & Track and has covered the auto industry for 35 years, including stints at Automotive News and AutoWeek. He has authored books including VW's New Beetle, Chrysler's Modern Concept Cars, and Corvette Dynasty.



Cadillac will have a bona fide BMW 7 Series and Mercedes S-Class competitor in the near future.

While the announcement that Cadillac has axed plans for a super luxury flagship is disappointing in some respects, the glass-half-full take on this announcement is the confirmation that the fullsize Omega platform does exist and that Cadillac will have a bona fide BMW 7 Series and Mercedes S-Class competitor in the near future, perhaps as early as 2016. And given Mercedes' recent Maybach experience, it's probably not a bad move - better to establish a mainstream rear-drive flagship first, then move on at some later date with a true halo car.

It's also said that this project will cost way more than its expected return, but if the cancellation frees up some funds, does that mean we might see a Buick Roadmaster on the Omega platform? Certainly, Buick could benefit from a new rear-drive fullsize sedan or even a Riviera-like coupe that could be a hot seller in both North America and China.

Speaking of Buick, GM Chairman Dan Akerson has mused about closer Buick-Opel ties that could bring the small Opel Adam and Cascada convertible over to America, though homologation remains an issue. The Adam has some elements of Mini cool and the success of the brand also means that there is potential for premium small cars, which would be right in Buick's wheelhouse. Adding the Adam and the Cascada to Buick's lineup not only is consistent with the historic relationship between the German and American divisions, but is also a way to keep the assembly lines running in Europe and perhaps stem the red ink.

GM's plan will take time and money, even as both are in short supply.

GM also desperately needs to raise Opel's image from a mass-market player to a more premium marque if its European strategy of strengthening the Chevy brand is going to work. The recent personnel moves of putting Alan Batey at the head of global sales for Chevy and bringing Thomas Sedran over from Opel underscores GM's intention of making the Bowtie as recognizable as the Ford oval around the world.

But GM still has to sort out Vauxhall and Opel to forge a realistic pecking order in its market positioning. By comparison, Volkswagen has been much more successful in carving out specific niches from entry-level Skoda up through mainstream VW and into luxury Audi than GM has with its weak Vauxhall/Opel, Chevrolet, Cadillac alignment.

Recasting all these players and giving them the necessary product to deliver on the new brand promises will take time and money, even as both are in short supply. Further complicating matters is the recent play by PSA to offer GM a greater share at the expense of the Peugeot family. The earlier, grandiose plan of component and platform sharing seems to be unraveling, and if GM has a shot of getting its European house in order, it doesn't need the distraction of taking on a French patient at this time.

Perhaps the best course of action is to let the French fend for themselves.

While some higher-ups in GM management, like vice chairman Steve Girsky, have expended considerable time and effort in trying to make the PSA link work, perhaps the best course of action at this point is to move on and let the French fend for themselves.

With a contracting economy, too much capacity and hungry competition, Europe is likely to remain a money pit for the foreseeable future. Looking for a way to cut losses and build a solid foundation for the future that includes some exports back to this market may very well be the key to succeeding at home and abroad.


Matt DeLorenzo is the former editor-in-chief of Road & Track and has covered the auto industry for 35 years, including stints at Automotive News and AutoWeek. He has authored books including VW's New Beetle, Chrysler's Modern Concept Cars, and Corvette Dynasty.




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    • 1 Second Ago
  • 72 Comments
      A Brown
      • 1 Year Ago
      Personally I think Opel/Vauxhall will always struggle to match VW for image. I'm British, and in the UK vauxhall is an acceptable brand, here in Holland Opel really doesn't have a good image, while those in the UK see Opel as exotic and so believe the Vauxhall brand. While if they were both rebadged as Buick in Europe they would completely alienate buyers. If GM has held onto Saab, Saab may have held enough brand value to become the Mid-premium brand, while Opel/Vauxhall could have remained the cheaper every day brand. Then there would have been no need for Chevrolet. Product is also important. You can't increase prices before your cars are really worth it in the eyes of the buyer. Look at Kia/Hyundai and Skoda - the product was massively improved, people thought they were getting a good deal, then they increased prices. All 3 brands are losing their cheap stigma and their customer base is expanding.
      cpmanx
      • 1 Year Ago
      Ah, I see. The way to improve GM's European operations is to find "a way to cut losses and build a solid foundation for the future." Thanks for the tip. I'll bet succeeding is better than failing, and selling more rather than fewer vehicles would help.
      Michael Scherping
      • 1 Year Ago
      I think PSA and Mazda should merge. Mazda has a North American Dealer Network and similar positioning as Peugeot, so they can platform share, while at the same time - selling Citroen's DS line stateside to give Fiat and Mini a run for their money. That way, PSA is no longer dependent on Europe and can stop or slow the bleeding, and both can benefit from larger economies of scales, thus recieving better volume discounts from their suppliers.
        Brodz
        • 1 Year Ago
        @Michael Scherping
        Mazda is on the path to success now, having just turned their own fortunes around... they may not want to have to fix that French basket case. I hope they do though, because it's sad when a car brand dies.
      Cookies
      • 1 Year Ago
      Interesting arguments. Opel indeed needs some very serious image work in order to compete with Volkswagen. They have solid (and in my opinion good looking) entries, from the handsome insignia to the aging but likeable Corsa. It is a shame that the Adam is stuck with the Corsa's aging power plants. In all honesty I don't know what the objective reasons are for choosing a Volkswagen over an Opel, maybe a perceived solidity that Opels allegedly don't possess. I couldn't speak from personal experience about Opel's build quality and mechanicals, no one I know has owned one (which in itself is indicative of Opel's problem). I think it has more to do with the fact that Opel is considered to be a brand for Europe's proletariat. They have cars like the Manta, Calibra and Tigra to thank for that reputation and their perpetually long-haired, cigarette-in-the-corner-of-their-mouth, track-suit-wearing drivers... Chevrolet is less than irrelevant, at least in Western Europe, certainly compared to Volkswagen and Opel sales. They are associated with cheap, plasticky Daewoo's (which they have been for quite a few years), and Cadillac... Well, Cadillac doesn't offer Diesel engines for one thing. Their here-again-gone-again presence in Europe is not exactly confidence inspiring for prospective owners and the Germans offer infinitely more possibilities for speccing a car just the way you like it (I'm not just talking about the dozen or so engine/transmission choices for each of the established German competition's models). I really wish more Europeans would buy Caddies, they look stunning (especially the new CTS and ATS) and reportedly interior quality is also finally approaching that of the European brands. Offering the ELR in europe would give them something unique that no other brand has, an electric luxury car. Lots of work for GM, but they're doing well lately. I hope they'll be able to strengthen their position here.
      mike
      • 1 Year Ago
      I don't get why they don't just rebrand in Europe and Australia. Have Chevrolet take over for Vauxhall and Holden and have Buick take over for Opel. It would streamline their vehicle branding and advertisements and would flush out a bunch of unneeded management. I know the brand names mean things to some people over there and they'd run the risk of alienating some consumers, however, it would be a smart move.
        aatbloke1967
        • 1 Year Ago
        @mike
        Great idea ... which would resign GM to the scrap heap. Can Opel, and GM is finished in Europe.
          Jerry
          • 1 Year Ago
          @aatbloke1967
          But GM would make over $1 billion a year more profit by just cutting off Opel's cash siphon!
      robitrobit
      • 1 Month Ago

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      Pj Taintz
      • 1 Year Ago
      so in other words, we lost pontiac because of those ******** over seas. thanks ********
      Terry Actill
      • 1 Year Ago
      Does that car ladder mentality still exist at GM? The one where you buy the shitty cheap Chevy and if you work hard enough you creep up the car ladder buying less shitty models until you are an old codger and buy a Cadillac that last a couple of years until you die. If you have the money you buy what the hell you want. Period.
        normc32
        • 1 Year Ago
        @Terry Actill
        Most full line manufactuers do the same. Except for some who don't fit this mold they end up buying Japanese these days.
          • 1 Year Ago
          @normc32
          [blocked]
        Terry Actill
        • 1 Year Ago
        @Terry Actill
        You are quite correct Terrence. The car buying ladder mentality does exist at GM. That is why you bought a GTi.
        hgeorgech
        • 1 Year Ago
        @Terry Actill
        and you still have your '72 AMC Pacer? How many pymnts left on the loan??
      Jonathan Knapman
      • 1 Year Ago
      Opel/Vauxhall do seem to be heading in the right direction. Their products certainly have a very premium look to them, which I guess is the first of many stepping stones necessary. They do, however, need more sophisticated engines if they wish to be truly considered alongside Volkswagen. Opel's current crop of engines, particularly petrols, is quite pitiful when you compare it to the small capacity engines of Ford, PSA and VW, but I believe GM is working on that. Funnily enough, even as a value brand I imagine marketing Chevy is going to be a great deal more difficult. Even if most of the Chevy products we receive in Europe are designed in South Korea, their image is still unashamedly American, which is undoubtedly a hurdle. Furthermore, Europeans are spoilt for choice when it comes to value brands. Kia, Hyundai, Skoda, and arguably Seat are all producing quantifiably better products than those of Chevrolet. In essence it kind of leaves you wondering what Chevy in its current incarnation has to offer in the European market (and it pains me to say this because I do have an affinity towards the brand).
        SpikedLemon
        • 1 Year Ago
        @Jonathan Knapman
        Let alone that you can get a better Skoda than an Opel for the money.
        Daniel D
        • 1 Year Ago
        @Jonathan Knapman
        Biggest disappointment in the new Holden Commodore is the six cylinder engines. The go ok, but make lots of unpleasant noise doing it. Holden threw a ton of sound proofing into the latest Commodore so you didn't need to hear it. The soon to be discontinued straight six in the Falcon is a much better motor.
      Luis A. Martinez
      • 1 Year Ago
      Same all over again,Opel is Dead just like Saab.Daewoo is the main core for cars on that segment......poor management and little cooperation make this even more sad,couple years from now when those Sparks,Sonic,Cruze and more and more CUV start giving headache is going to be late and again more upset customers leaving the brand that one time scare them.
        • 1 Year Ago
        @Luis A. Martinez
        [blocked]
        Jerry
        • 1 Year Ago
        @Luis A. Martinez
        You my friend must be a GM employee who has been watching this slow motion train wreck come apart internally...
          aatbloke1967
          • 1 Year Ago
          @Jerry
          Jerry, either you're delusional or you're not even old enough to even work. Certainly one or the other.
          Jerry
          • 1 Year Ago
          @Jerry
          Bloke, I worked at GM for 4 years ;) Do you work for Vauxhall?
          aatbloke1967
          • 1 Year Ago
          @Jerry
          No. I'm a tax consultant in the Big Four.
      tbird57w
      • 1 Year Ago
      aiming at the 7 series? the 7 series has been a slug for a long time.
      Puck
      • 1 Year Ago
      Best time to buy an OPEL/Vauxhall...when they're in crisis, they build bloody good cars.
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