What's the news?
Following the recent axing of the Chrysler brand in Europe, another is set to disappear, this time from Russia. General Motors has announced that it is withdrawing the Opel brand from sale by December 2015, while it also said that Chevrolet will "minimise its presence." The realignment of priorities will see the American automotive giant focus on building its share in the premium segments of the Russian car market with its Cadillac brand.
Following the announcement Opel Group CEO, Dr. Karl-Thomas Neumann, moved to assure customers that both Chevrolet and Opel would work closely with the existing dealer networks to ensure that both companies honour obligations to customers from warranty, parts and servicing standpoints. "We want to thank our customers and dealers for their loyalty to the Chevrolet and Opel brands," said Dr. Neumann.
Opel is aiming to grow its market share in Europe to 8 per cent by 2022, and more importantly, to increases its profit margin to 5 per cent. "We had to take decisive action in Russia to protect our business. We confirm our outlook to return the European business to profitability in 2016 and stick to our long-term goals as defined in our DRIVE!2022 strategy," said Dr. Neumann.
Commenting on the decision, General Motors President, Dan Ammann, said: "This change in our business model in Russia is part of our global strategy to ensure long-term sustainability in markets where we operate." He went on to say, "This decision avoids significant investment into a market that has very challenging long-term prospects."
Although the Chevrolet brand will continue to be sold, it will consist mainly of US-built models like the Corvette, Camaro and Tahoe. Production of vehicles at GM Auto's plant in St. Petersburg will cease in the middle of 2015, whereby the facility will then become idle. In addition to this, the contract assembly of Chevrolet vehicles at the GAZ facility will also be halted in 2015.
Anything else?
At a time when American-Russian political relations are far from peak levels, the move by GM Auto to wind down dealer networks and shut factories that will have an impact on the jobs front in the country won't go unnoticed. However, the GM-AvtoVAZ joint venture to build and market the current Chevrolet Niva (based on the Lada Niva) may help soften the blow, as will the proposed investment to grow the Cadillac brand.