GM Europe: fails to break even in 2011, targeting one-billion Euro profit in 2016

Opel introduces New Zafira Tourer and premium minicar; Chevrolet introduces New Malibu

2012/01/31

Summary

 With the objective of breaking even (EBIT before restructuring charges) in GM Europe by 2011, GM has been pressing ahead with its restructuring plan including a 20% reduction of production capacity of its subsidiary in Europe, Opel/Vauxhall. In November 2011, however, the company announced that it would not be able to break even in 2011 due to a slumping economy in Europe. It will further update its lineup and reduce costs in the future, aiming to move into the black earlier.

 Opel/Vauxhall says that it would introduce 30 new models and models that will be face lifted by 2014 and will secure a profit of 1 billion Euros, profit margin on sales of 5%, and a marketshare of 8.5% (6.2% in 2010) in Europe in 2016.

 Concerning the Chevrolet brand, GM aims to boost the segment-coverage ratio in Europe and to almost double the sales volume in Europe to 1 million in 2016. The company plans to boost the marketshare in Europe from 2.5% in 2010 to 4-5% in the medium run.

Related Reports:  GM Europe (December 2010), GM in China (1:August 2011)/(2:August 2011)
SAIC Motor (July 2011), GM (March 2011)



Model plan: GM Europe positions Opel brand up-market and Chevrolet as entry-level brand

 GM Europe says that, in order to boost sales in Europe, it needs to differentiate the Opel/Vauxhall brand and the Chevrolet brand. In recent years, the sales volume of Chevrolet models increased to about 500,000 in Europe. In order to avoid the competition of the two brands, both of which are regarded as a value brand, GM intends to move the Opel/Vauxhall brand up-market to compete with Volkswagen, and, on the other hand, to position the Chevrolet brand as the entry-level brand.

 In 2012, Opel/Vauxhall will launch a premium minicar, whose code name is the Junior, and the Mokka subcompact SUV, which is a sister model of the Buick Encore. In addition, it is planning to introduce models such as the New Zafira Tourer 7-seat minivan and the New Combo, which is available in a passenger car and commercial vehicle version and which Fiat supplies on an OEM basis.

 Chevrolet introduced multiple new models in 2011 and increased the segment-coverage ratio in Europe from around 30% to 50%. In 2012, the company will launch the New Malibu midsize sedan, saying that it would cover two thirds of the entire segment in the future. Reportedly, GM plans to transfer Chevrolet's marketing operations in Europe to the GMIO (General Motors International Operations) at the beginning of 2012.

GM Europe's model plan (2011-2013)

Launch Outline
Opel Ampera End of 2011  The Ampera is an Opel version 5-door hatchback PHV, Chevrolet Volt, with a slightly-modified exterior. The model can run 40-80km in an EV mode. When the gasoline engine is used, the cruising range is up to 500km. The 2012 sales target is 10,000. GM's Hamtramck plant in the US produces it, exporting it to Europe.
New Zafira Tourer Jan. 2012  The New Zafira Tourer is a third-generation 7-seat high-end minivan. The model has a seat arrangement called the Flex7; the three separate seats in the second row can be moved individually. It comes with progressive safety equipment including Traffic Sign Recognition, Side Blind Spot Alert, and Collision Mitigating Braking.
New Combo Feb. 2012  The New Combo is a third-generation compact van that is available in a passenger car and commercial vehicle version. Beginning with this third-generation model, Fiat supplies the Doblo on an OEM basis. Fiat produces it at a plant in Turkey under Tofas, its joint venture company, with plans to supply 6,000 units in the first year.
minicar First half of 2012  The model is a new minicar whose code name is the Junior. Opel calls it a lifestyle model and targets the generation that freely manipulates digital devices such as the iPod. The body of the model is compact, but it is a premium model that aims to make the Opel brand into a high-end brand. The price of the model is planned to be higher than that of Opel's other compact cars.
Mokka End of 2012  The Mokka is the first subcompact SUV from a German OEM. It sits below the Antara in the lineup. The model is Opel's version of the Buick Encore, which was unveiled at the 2012 Detroit Motor Show. Two types of gasoline engines and one diesel engine are available. The model is equipped with drive assist/safety equipment for high-end vehicles.
New Vivaro 2013  The New Vivaro is a light commercial vehicle that is co-developed with Renault (Renault's name: Trafic). They have decided to cooperate on the second-generation model, which Vauxhall's Luton plant in the UK will produce. The high-roof version will be produced at Renault's Sandouville plant in France.
New Corsa 2013  The Corsa is a compact hatchback. The Zaragoza plant in Spain is expected to produce the model.
Astra convertible 2013  The Astra convertible is a convertible that is based on the Astra compact car. The Gliwice plant in Poland is expected to produce the model.
Chevrolet Orlando Mar. 2011  The Orlando is a new model 7-seat family van. The model is a crossover-style van that has the comfort/ operability of a passenger car and a spacious interior.
New Aveo hatchback & sedan Aug. 2011  The Aveo hatchback & sedan is a third-generation subcompact. The CO2 emission of a model with a 1.3L turbo diesel engine is 100g/km or less.
Cruze hatchback Fall 2011  The Cruze hatchback is a 5-door hatchback that is developed based on the Cruze sedan. The model has a roof line similar to that of a coupe and a short front/rear overhang, boasting a dynamic style similar to a sedan. The capacity of the cargo space is about 400L.
Camaro coupe & convertible Sep. 2011  The Camaro coupe & convertible is a sports car that was revived for the first time in about 10 years. The max. output, max. torque, and max. speed of a model with a 6.2L V8 engine plus MT is 432hp, 569Nm/4,600rpm, and 250km/h, respectively.
Volt Nov. 2011  The Volt is a 5-door hatchback PHV (GM calls it extended-range EV). The model was launched in the US at the end of 2010. The selling price in Europe is 41,950 Euros (tax included). The sales target is 1,000-2,000 units per year.
New Malibu 2012  The New Malibu is a midsize sedan. The model is a flagship model under the Chevrolet brand. The current model is designed exclusively for North America, but the new model will be launched in the global market, including China and Europe. The European version comes with a 4-cylinder 2.0L gasoline engine/2.4L diesel engine in combination with MT or AT.
Source: Opel Press Release 2011.3.24/2011.9.12/2011.9.13/2012.1.5, Chevrolet Europe Press Release 2011.8.23, Automotive News Europe 2011.11.7
(Note) In January 2012, GM announced that, since the Li-ion battery used in the Chevrolet Volt PHV could catch fire, it would develop a fix to the battery pack on about 8,000 units that it had sold in the US without charge. Upon this announcement, Opel decided to ship the Ampera, a sister car of the model, after it had implemented the same repair of the battery to enhance its safety. The company plans to begin full-scale shipment in February 2012.

 



Production facilities: Constructing an engine plant with production capacity of 500,000/year in Hungary

 GM Europe invested USD700 million in 2010 and USD200 million in the January-September period of 2011 in its restructuring plan including a 20% reduction of Opel/Vauxhall's production capacity and slashing about 8,000 job.

 The Bochum plant in Germany will drastically reduce workforce while it will newly set up production facilities for the New Zafira Tourer. GM will build a new engine plant that is capable of producing 500,000 units per year in Hungary in order to produce fuel efficient engines. GM's powertrain engineering center in Torino, Italy will add three new test benches.

Opel/Vauxhall: plans to restructure the Bochum plant in Germany

 Opel/Vauxhall will improve efficiency at its Bochum plant in Germany, planning to secure a fixed number of employees into the future. Under the restructuring plan that was initiated at the beginning of 2010, the plant will reduce its workforce by 1,800 to 2,800. In 2010, 600 workers already left the plant. In 2011, 300 employees were transferred to the Russelsheim plant. The company is currently pressing ahead with further job cuts as it offers incentives for voluntary turnovers.
 The company will invest 175 million Euros in the vehicle plant in order to set up new production facilities and will begin producing the New Zafira Tourer. It originally planned to close the transmission plant at the end of 2011, but will continue production until the end of 2013 with about 300 employees due to a strong demand for cars for export.

Source: Opel Press Release 2011.6.1

Opel/Vauxhall: boosts production capacity of the Kaiserslautern engine plant in Germany

 Opel/Vauxhall boosted the production capacity of its Kaiserslautern engine plant in Germany, which produces diesel engines for the Astra and the Insignia, from 180,000 to 250,000 per year, because of the increased orders for the two models in the first half of 2011.

Source: Opel Press Release 2011.7.6

Opel/Vauxhall: begins construction of a new engine plant in Hungary

 In April 2011, Opel/Vauxhall started the construction of a new engine plant on the same site of its Szentgotthard plant in Hungary. The investment is worth 500 million Euros. Operations will begin at the end of 2012. The company will employ 800 new workers. The production capacity in full operation is 500,000 units a year. The new plant plans to produce small/midsize gasoline engines and midsize diesel engines. All the engines meet Euro6 emission standards, which will enter into force in Europe in 2014.

Source: Opel Press Release 2011.4.12

GM: invests 20 million Euros in its powertrain engineering center Torino in Italy

 GM will invest 20 million Euros in Powertrain Engineering Center Torino in Italy in the next four years (announced in July 2011). The Engineering Center is in charge of the development of the latest technology for diesel engines for GM's passenger cars worldwide, for diesel control system, for hybrid systems and for conventional powertrains. The Center already has 15 test benches, but, with this investment, will add three new test benches and will conduct simulation tests concerning climate and comfort.

Source: GM Press Release 2011.7.15

 

GM Europe's production volume by plant (own plant)

(unit)
Country Plant Production model 2009 2010
Belgium Antwerp Astra, Astra Twin Top 88,862 51,626
Germany Bochum Astra, Zafira 142,337 147,715
Eisenach Corsa 133,038 139,193
Russelsheim Insignia, Buick brand models 146,847 177,542
Total 422,222 464,450
Poland Gliwice Astra, Zafira 96,697 158,584
Spain Zaragoza Corsa, Corsa Van, Meriva, Combo 339,565 380,203
UK Ellesmere Port Astra, Astra Van 80,130 106,288
Luton Vivaro, Renault Trafic 54,207 72,565
Total 134,337 178,853
Total 1,081,683 1,233,716
GM Europe's production volume by plant (other manufacturers' plant)
Country Plant Production model 2009 2010
France Batilly Movano 5,685 9,943
Cerizay Tigra Twin Top 3,200 -
Hungary Esztergom Agila Ⅱ 50,691 27,750
Russia St. Petersburg Antara, Astra 36 6,854
Spain Barcelona Vivaro 999 731
South Korea Bupyong Antara 6,501 8,834
Ukraine Zaporizhye Astra Classic 144 -
Total 67,256 54,112

Source: Opel in Europe Facts & Figures 2010 (Note) St. Petersburg plant in Russia reports to GMIO (GM International Operations) since 2010.

 

GM Europe's engine/transmission production

Engine production by plant

(unit)
Country Austria Hungary Germany Poland Total
Plant Aspern Szentgotthard Kaiserslautern Tychy
2009 407,758 275,811 122,389 122,348 928,306
2010 525,099 215,666 159,473 162,704 1,062,942

Transmission production by plant

(unit)
Country Austria Hungary Germany Total
Plant Aspern Szentgotthard Bochum Russelsheim
2009 674,398 12,013 420,800 72,216 1,179,427
2010 872,429 10,308 323,423 126,863 1,333,023

Source: Opel in Europe Facts & Figures 2010

 



Russia: GM boosts production capacity by 75% to 350,000, having opened a new engine plant in Uzbekistan

 GM Europe is currently expanding sales in Russia in addition to Europe, and is targeting the doubling of its marketshare from 2.6% in 2011 to 5% within two or three years. In the January-September period of 2011, Opel/Vauxhall doubled sales volume year-on-year to 49,000 units in Russia. Sales volume of Chevrolet models increased by 57% to 127,000, ranked second following the Lada brand.

 GM's activities for local production are active. GM will boost the combined production capacity in Russia of its own plant and a joint venture plant from 200,000 to 350,000 a year. In addition, the company will consign production of the New Chevrolet Aveo to GAZ starting in 2012. In Uzbekistan, it opened a new engine plant, currently producing fuel efficient engines.

GM: boosts production capacity in Russia from 200,000 to 350,000

 GM and the Russian Federal Ministry of Economic Development concluded a letter of agreement on the enhancement of GM's production capacity. In the next five years, GM will increase production capacity of its wholly-owned St. Petersburg plant to 230,000 a year and that of the Togliatti plant, which it jointly owns with AvtoVAZ, to 120,000 per year. The combined production capacity will increase from the current 200,000 a year to 350,000. The St. Petersburg plant plans to produce Opel models in addition to Chevrolet models.
 Based on the agreement with the Russian government, GM will increase the local-content ratio of engines and transmissions to 30% and that of other parts to 60%, and will also enhance the R&D center that is in charge of product development for Russia. As a response to such investment in Russia, the Russian government lowers the import duties for GM's parts to be imported over eight years.

Source: GM Press Release 2011.6.2

GM: consigns production of the New Aveo to Russia-based GAZ starting in mid 2012

 In February 2011, GM reached an agreement with Russia's major OEM, GAZ, on the consignment of production of the New Chevrolet Aveo compact car (sedan and hatchback). GAZ will produce 30,000 units a year at its Nizhniy Novgorod plant starting in the middle of 2012. GM will market the product, which the plant produces, in Russia.

Source: GM Press Release 2011.2.1

GM: opens a new engine plant in Uzbekistan

 In November 2011, GM and UzAvtosanoat (Uzbekistan automotive industry public corporation) opened and started operations of an engine plant of a joint venture company, GM Powertrain Uzbekistan (owned 52% by GM), in Tashkent, which is the capital of Uzbekistan. The plant is capable of producing 225,000 units a year. It produces 1.2L and 1.5L fuel-efficient engines, supplying them to the Chevrolet Spark that is manufactured in Uzbekistan. The model is marketed in Uzbekistan and is also exported to Russia and CIS countries.

Source: GM Press Release 2011.11.15

 



Sales volume: GM Europe increases sales volume by 6.7% to 1.319 million in January-September 2011, having an 8.8% share of the market in Europe

 In the January-September period of 2011, GM Europe increased sales volume by 6.7% year-on-year to 1.319 million units. Its marketshare grew from 8.7% to 8.8%.

 Among its brands, Opel/Vauxhall boosted sales volume by 6.5% to 938,000 as it was supported by strong sales of the Meriva and the Astra Sports Tourer. Chevrolet continued to enjoy favorable sales of compact cars such as the Spark and the Aveo, increasing sales by 8.9% to 379,000 units.

 Opel/Vauxhall is expected to sell about 1.3 million units in 2011, of which about 20,000 are to be exported outside of Europe. It started exports to China and Israel. It will gradually begin exports to Australia, South Africa, Chile, and Argentina, targeting the export of 100,000 units in the long run.

GM Europe's sales volume by brand

(unit)
2005 2006 2007 2008 2009 2010 Jan.-Sep 2010 Jan.-Sep. 2011
Opel/Vauxhall 1,601,490 1,563,196 1,630,830 1,458,290 1,209,000 1,178,000 881,000 938,000
Chevrolet 240,500 341,291 457,134 506,309 426,000 477,000 348,000 379,000
Saab 82,050 90,457 85,052 66,578
Others 59,190 6,899 8,486 8,183 32,000 7,000 7,000 2,000
GME total 1,983,230 2,001,843 2,181,502 2,039,360 1,668,000 1,662,000 1,236,000 1,319,000
Source: GM Financial Highlights Q4 2010/Q3 2011
(Note) 1. Sales volume of GM Europe includes that in Western, Central, and Eastern Europe as well as that in Russia and CIS countries.
2. Opel brand vehicles are sold under the Vauxhall brand in the UK.
3. Sales of Saab vehicles are included up to February 2010. In 2009 or later, sales volume of Saab models is included in Others.

 

GM Europe's market share by brand in Europe
2006 2007 2008 2009 2010
Opel/Vauxhall 7.1% 7.0% 6.6% 6.4% 6.2%
Chevrolet 1.6% 2.0% 2.3% 2.3% 2.5%
Saab 0.4% 0.4% 0.3%
GM Europe total 9.2% 9.4% 9.3% 8.9% 8.8%

Source: Opel in Europe Facts & Figures 2010, Chevrolet Europe Sales Highlights 2010 (Note) GM Europe's market share in Europe during Jan.-Sep. 2011 was 8.8%.

 



Business results: GM Europe increases sales by 19% in January-September 2011, posting a loss of USD580 million (before interest and tax)

 In the January-September period of 2011, GM Europe increased net sales and revenue by 19.3% year-on-year to USD20.48 billion and improved EBIT from a loss of USD1.2 billion to a loss of USD580 million. The company minimized EBIT to a loss of USD390 million in the first quarter and registered a profit of USD100 million in the second quarter, but posted a loss of USD290 million in the third quarter again. This is mainly because the company suffered from slowdown in sales due to the slumping European economy and debt crisis.

 GM planned to reach break even (EBIT before restructuring charges) for GM Europe in 2011, but gave up the plan in November 2011.

 Opel/Vauxhall aims to move into the black at an early date in the future through the introduction of multiple new models and cost reduction. It targets post profits of 1 billion Euros and a profit margin on sales of 5% and to secure marketshare of 8.5% (6.2% in 2010) in Europe in 2016.

GM Europe's business results (2010-September 2011)

(in millions of USD)
2010 2010 2011
Jan.-Mar. Apr.-Jun. Jul.-Sep. Jan.-Mar. Apr.-Jun. Jul.-Sep.
Europe (GME) Net sales and revenue 24,076 5,461 6,044 5,657 6,870 7,459 6,151
EBIT (1,764) (477) (160) (559) (390) 102 (292)
(Reference) Entire GM Net sales and revenue 135,592 31,476 33,174 34,060 36,194 39,373 36,719
EBIT 7,193 1,914 2,131 2,245 3,208 3,125 2,402
Source: GM Financial Highlights Q4 2010/Q3 2011, GM 2010 Annual Report
(Note) 1. Sales volume of GM Europe includes that of Chevrolet models, while Chevrolet's business results are not included in those of GM Europe (they are included in the GMIO division).
2. In 2010, GM transferred the business results of some of the corporations in Russia and Uzbekistan from the GME division to the GMIO division.
3. After GM emerged out of Chapter 11 bankruptcy, it started as the New GM on July 10, 2009. The pretax loss of GM Europe from January to July 9, 2009 is USD2,815 million. Concerning EBIT from July 10 to December, the company posted a loss of USD814 million.

 



(Reference) Sales volume by model and by country

GM Europe's sales volume by model

(unit)
2008 2009 2010 (Reference)
Jan.-Sep. 2010 Jan.-Sep. 2011
Opel Vauxhall Agila 48,199 59,704 33,826 26,572 20,987
Corsa 425,336 375,397 347,229 240,916 235,763
Meriva 112,898 86,517 104,932 69,420 101,193
Astra 438,219 328,117 363,517 217,384 214,042
Zafira 161,835 99,894 95,150 67,602 56,435
Vectra/Signum 97,753 15,576 332
Combo 58,222 34,127 34,529
Vivaro 63,096 34,348 36,417 3,917 5,108
Movano 14,439 7,537 8,193
Tigra 7,862 6,946 645
Antara 22,530 14,780 10,976 6,553 5,940
Insignia 4,639 143,779 142,106 94,161 99,512
Ampera 73
Others 3,262 2,399 305 5,791 1,263
Total 1,458,290 1,209,121 1,178,157 732,316 740,316
Chevrolet Matiz/Spark 77,408 82,520 126,662 51,352 49,895
Kalos/Aveo 127,550 91,229 78,918 28,205 22,918
Lacetti 117,029 17,661 17,806
Nubira 45,679 44,742
Tacuma/Rezzo 10,904
Niva 51,983 25,801
Lanos 49,284 23,170
Captiva 37,900 25,352 31,543 14,423 10,928
Epica/Evanda 13,453 7,748 7,726
Nexia (Uzbek) 15,982
Cruze 21,048 59,261 19,765 18,738
Orlando 13,923
Others 4,816 85,533 110,536 6,351 1,871
Total 506,309 425,741 477,194 120,096 118,273
Saab 9-3 53,740
9-5 12,694
Others 144
Total 66,578
Others 8,183 32,000 7,000 1,256 544
Grand Total 2,039,360 1,666,862 1,662,351 853,668 859,133

Source: Opel in Europe Facts & Figures 2010, Chevrolet Europe Sales Highlights 2010 (Note) Data in January-September 2010 and in January-September 2011 are from Automotive News Europe. They cover only Western Europe.

 

Opel/Vauxhall's sales volume and market share by country (Europe)

(unit)
Country 2009 2010 (Reference) Market share (2010)
Jan.-Nov. 2010 Jan.-Nov. 2011
United Kingdom 260,873 274,700 254,660 249,995 12.0%
Germany 347,697 243,451 217,563 245,233 7.6%
Italy 133,615 133,037 122,086 112,700 6.2%
France 96,030 102,063 87,017 92,474 3.8%
Spain 72,033 76,383 68,871 55,712 6.9%
Belgium & Luxembourg 46,081 45,431 40,931 43,788 6.8%
Turkey 24,710 41,572 31,525 41,372 5.3%
Russia 34,277 40,875 35,341 60,881 2.1%
Netherlands 30,445 39,961 34,420 39,068 7.4%
South East Europe 37,450 35,456 n.a. n.a. 5.5%
Austria 24,240 27,964 24,706 24,564 7.7%
Poland 23,503 25,973 22,427 19,494 6.7%
Portugal 13,363 20,585 17,358 12,469 7.6%
Switzerland 15,343 17,581 15,477 16,507 5.4%
Greece 17,795 13,478 n.a. 10,884 8.8%
Denmark 8,387 11,800 10,144 11,140 6.8%
Sweden 6,838 7,950 7,091 8,525 2.4%
Ireland 4,688 7,137 7,062 6,886 7.1%
Norway 4,989 5,339 1,077 1,188 3.3%
Finland 3,323 5,051 4,690 5,632 4.0%
Ukraine 2,390 1,691 n.a. n.a. 0.9%
Other Europe 613 370 n.a. n.a. 1.4%
Other Eastern Europe 372 309 n.a. n.a. 0.1%
Total Europe 1,209,055 1,178,157 1,025,124 1,070,224 6.2%

Chevrolet's sales volume and market share by country (Europe)

(unit)
Country 2009 2010 (Reference) Market share (2010)
Jan.-Nov. 2010 Jan.-Nov. 2011
Uzbekistan 104,144 145,148 n.a. n.a. 97.0%
Russia 104,398 116,223 103,681 157,029 5.9%
Italy 52,894 36,821 15,322 30,137 1.7%
Germany 32,115 25,033 21,847 26,743 0.8%
Spain 20,246 23,022 21,649 15,787 2.1%
France 21,023 21,253 18,009 20,916 0.8%
Turkey 10,408 18,061 14,402 17,324 2.4%
United Kingdom 18,660 13,680 6,720 11,818 0.6%
Other Europe 61,853 77,953 n.a. n.a. -
Total Europe 425,741 477,194 250,262 329,194 2.5%

Source: Opel in Europe Facts & Figures 2010, Chevrolet Europe Sales Highlights 2010 (Note) Data in January-November 2010 and in January-November 2011 are from each country's automobile manufacturers association and other sources.

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