Opel exits China in favor of Europe
Last Updated: 2014-04-11 10:47 | Global Times
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An Opel car displayed at the Geneva Motor Show in March Photo: CFP

At a time when many automakers are seeking to make further inroads into the booming Chinese market, German carmaker Opel has surprised the auto world with the announcement it will exit the Chinese market.

Opel, owned by US automaker General Motors (GM), said on March 28 that it would stop selling cars in China by the end of 2014.

After-sales services and authorized Opel auto parts will still be available to Chinese car owners though, it said.

Opel CEO Karl-Thomas Neumann has described the move as a "long overdue decision," and pointed out that GM already has other brands that are more well-established in the market.

"It would have cost hundreds of millions of euros to raise awareness of the Opel brand [in China] and to expand the distribution network. Buick, however, is one of the market leaders in China," the CEO said.

Buick is one of GM's best-selling cars in China. In 2013, 22 Opel dealers in China sold a total of 4,365 vehicles. In comparison, Buick, with 650 dealers, sold about 810,000 vehicles, including several models that were co-developed with Opel.

Some experts noted that GM's move to remove Opel's small pre?sence in China was aimed at paving the way for Buick's development.

Exiting the world's largest auto market does not necessarily signify the downfall of the Opel brand, experts noted - the brand is planning to further expand in its home market of the Europe.

Also on March 28, Opel announced that in addition to four Insignia variants and the Zafira Tourer, which will be produced as of January 2015, its plant in Ruesselsheim, Germany, is planning to build two new vehicles in the next few years and is also expected to produce a Buick model for the American market.

Shrewd retreat?

Opel entered the Chinese market in 1993 and it now has three models on sales there - Antara, Zafira and Astra. Despite an early entrance into the country, sales of Opel in China have been sluggish for a number of reasons, including a limited product and dealer network.

Opel's exit from China is part of GM's global resource-reallocation strategy. GM announced in December that most sales of its Chevrolet brand will cease in Europe by the end of 2015, and only some iconic Chevrolet vehicles will be sold.

In Europe, GM has put its marketing muscle behind Opel and Vauxhall, its British sister brand, experts said. In 2013, Chevrolet only sold around 200,000 units of cars in Europe, accounting less than 1 percent of the market share. In comparison, Opel and Vauxhall sold 780,000 units altogether in Europe.

Opel's development in China has been rather unpleasant.

The brand sold 5,000 units of cars in China in 2011, and the number declined to 4,500 in 2012. Meanwhile, GM sold 3.16 million units in 2013 in China.

Since many of GM's Buick and Chevrolet models are co-developed by Opel, and they have shared platforms with Opel cars, some experts noted that the existence of Opel in China may cause internal strife with the Buick brand.

Zhu Bin, an auto analyst at Shanghai-based consultancy LMC Automotive, noted that GM has Buick and Chevrolet to target the middle- and low-end market and its Cadillac brand for the luxury market - the company has a complete product line and it would be unwise to still invest heavily in promoting Opel in China.

"Opel is a liability for GM in China. It is a wise move [for the company to halt Opel sales in China]," Zhu told the Global Times Monday.

As many foreign carmakers have started to produce locally or to downscale their models, Opel - as an imported mass brand - is not appealing to Chinese consumers in terms of both product and price, according to Zhu.

In 2010, Opel announced a plan to revive the brand in China. But the plan did not succeed and the problems in China went unresolved.

But Zhang Zhiyong, a Beijing-based independent auto analyst, believes that the Chinese auto market, which has been the biggest for five consecutive years, is large enough to support many auto brands and Opel certainly has its potential.

Even though Opel shares technology with some Buick models, "it could well draw a group of Chinese consumers by altering the exterior and interior design," he told the Global Times, noting that some simple variants of other carmakers are also reporting decent sales.

According to Zhang, Opel has been marginalized by GM. "GM should make efforts to promote the brand and then pursue local production in China," he said, given that Opel has strong brand image and technology.

The picture will get even gloomier for Opel if it retreats to Europe, Zhang added. If the European market does not recover effectively, Opel may fade away and get sold by GM. "Just like what happened to Saab," said Zhang.

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