* Chevrolet finding it hard to make inroads in Europe
* Deep discounts, upscale models pose risk to Opel
* GM says to differentiate brands more clearly
By Christiaan Hetzner
GENEVA, March 6 When Geneva taxi driver Boulbaba
Ben Hassine took his Opel Zafira MPV back to the dealership for
maintenance, a salesman tried to sell him a Chevrolet Cruze
"It's a nice-looking model but far too thirsty, so I said
no," the 64-year-old said. "I only went in to change the spark
Both Opel and Chevrolet are owned by U.S. carmaker General
Motors and Ben Hassine's experience is symptomatic of a
rivalry that has developed between the two brands and risks
Chevrolet is General Motors' (GM) largest and most important
brand worldwide, selling roughly 5 million cars last year alone.
It plays a crucial role for the group in every major market
except one - Opel's home turf of Europe. Opel outsells Chevrolet
around five-to-one in the European Union, a region that
contributes only around 4 percent of the U.S. brand's sales.
When GM first rebranded Korean-built Daewoo cars in Europe
with the Chevy bowtie eight years ago, the plan was to market
them as no-frills versions of sportier, more innovative Opels.
But panned by critics and hurt like the rest of the industry
by a brutal downturn in European demand, Chevrolet has responded
by slashing prices and introducing more upmarket models -
putting it on collision course with its sister brand.
At the Geneva car show this week, Chevrolet threatens to
steal the limelight from Opel's upscale Cascada soft-top by
unveiling its sleek new Corvette Stingray convertible only a
short distance away.
With Opel itself reeling from over $1 billion of annual
losses and mired in a painful round of job cuts, the last thing
it needs is Chevrolet using cutthroat sales tactics to muscle
into Europe with the help of Opel's own dealers.
"Other carmakers have proven brands can coexist under one
roof, but we had the feeling that the two tried to take
customers away from each other," said one GM car dealer in
Germany, who sells both brands in his showrooms based in the
industrial Ruhr region.
GM recognises the problem, and says it is already fixing it.
"We don't want to have a Chevrolet right next to an Opel
anymore and our entire product strategy is geared towards more
clearly differentiating Opel models from their Chevrolet
counterparts," a senior GM manager told Reuters on condition of
anonymity, adding this included a stronger focus on exclusive
showrooms for both brands in future.
"It's a strategy coordinated across the entire group and
signed off by (GM Chief Executive Dan) Akerson himself."
But some analysts remain to be convinced the company can
change its ways and create clearly differentiated brands.
"GM doesn't have a brand strategy, it has a sales strategy,"
said Ferdinand Dudenhoeffer, head of the CAR auto industry think
tank based in Duisburg.
"HARD TO FATHOM"
Part of GM's problem is that it is far from clear it has
addressed the issues which have led high-fuel consuming Chevies
to be shunned in a cash-strapped, urbanised Europe.
The brand has quietly buried targets from 2010 to double
sales in Europe by mid-decade. In fact, its volumes have barely
budged, hovering around 200,000 cars ever since Daewoo was
reborn as Chevy in 2005, and its market share has crept up just
0.2 percentage points to 1.4 percent over the past eight years.
Nor has 2013 started well, with Chevrolet sales in Europe
plunging 39 percent in January to less than 10,000 cars. Opel
sold six times as many cars that month, helped by the arrival of
Experts question whether even Chevrolet's limp sales are an
accurate reflection of underlying demand, since the brand
engages heavily in common industry practices that artificially
Chevies are regularly among the top ten cars discounted
directly by the manufacturer in Germany, according to a monthly
rebate index published by CAR. Zero-money down, zero-interest
rate deals like "Chevrolet Family Weeks" offer customers the
equivalent of close to 30 percent off the sticker price of a
Data collected by Frankfurt-based Dataforce also show that
every other new Chevrolet in Germany, the brand's second largest
European market, was registered last year to a dealer or to GM
itself, rather than directly with a customer. These new cars are
ultimately sold as used at sharp discounts.
By comparison, Opel refrains from manufacturer rebates and
its share of so-called "self-registrations" came in close to 10
percentage points lower at less than 40 percent.
But that creates potential problems for Opel.
"Who wouldn't walk into an Opel showroom looking to buy a
Mokka SUV and drive off instead with its Chevy Traxx equivalent
that's 2,000 euros cheaper?" asked Christoph Sturmer of
researchers IHS Automotive.
"Chevrolet's plan in Europe is hard to fathom from the
outside, since it is a lot about internal politics," he added.
Chevrolet Europe President Susan Docherty refutes the notion
her business cannibalises sales of Opel, arguing her customers
can only choose from three basic option lines and aren't privy
to the same levels of customisation that an Opel buyer enjoys.
"You get to pick your engine, for instance and then maybe
you can pick a sunroof and navigation, but that's it," she told
Reuters in a recent interview.
"If someone goes over to the Opel side of the showroom, what
they really notice is that we equip things differently."