Last year, a slide of densely-packed figures was flashed up for just long enough for me to see that, in the UK, Vauxhall sells over almost 80 per cent of its vehicles to fleets and company purchasers, the highest proportion of all the car makers.
Business to business sales bring notoriously slim margins, if any. For any brand to be reduced to commodity status, with little emotional appeal to private car buyers, is a disaster. To put it in perspective, one industry paper claimed that GM Europe had lost £8.8bn since 1999. On the continent, Opel’s models are officially priced at a discount of nearly 10 per cent against the mighty VW. When it comes to a real punter negotiating a deal, that discount could end up being even higher.
Caught between high ex-factory costs and low showroom prices, Opel is desperately trying to drive up average transaction prices. According to a Bloomberg report, Opel is embarking on a scheme that will try to get buyers to spend money on high-tech extras such as sophisticated speed-sensitive headlights. Getting the typical customer to tick the options box for fancy headlights and, say, adaptive dampers could add £1800 to the transaction price and put Opel back on firm financial footing.
For me, it looks like a long shot. Perhaps even worse news for Vauxhall/Opel is the arrival of Chevy as a serious brand in Europe. 2011’s first half results for Chevrolet showed the brand seems to have become a global phenomenon while most of us were looking the other way. Chevy sold 2.35m vehicles worldwide which, not surprisingly, was the brand’s best performance in its 100 year history. To put that in perspective, the whole General Motors empire is expected to shift 8.56m vehicles across the world in 2011. If Chevy is consistent, it will account for a whisker over 50 per cent of all GM sales this year. If Chevy was a stand-alone company, it would probably end 2011 as the sixth or seventh largest carmaker in the world.
Much of Chevy’s engineering is carried out in South Korea by the impressive GM-DAT operation, which is currently putting the finishing touches to GM’s new global Corsa-size platform. Chevrolet’s success is underpinned by the fact that it is a truly global brand and that it is has been making significant gains in places as diverse as Argentina, Denmark and South Africa. Sales in China were up 15 per cent and up 54 per cent in Russia.
The Chevy Cruze, the company’s value Focus-segment model, shifted 330,000 globally in the first half of 2011, which means that a full 12 months should see this single model move a huge, Golf-rivalling, 660,000 units. With the launch of the Cruze hatchback and Orlando MPV boosting European sales to profitable private buyers, Chevy’s advance seems unstoppable, here and elsewhere. Simply, either Vauxhall must match VW pricing and make self-sustaining profits or it will be forced to compete with its Chevy sister brand - and end up deep in the red. I’m not sure Vauxhall/Opel has a realistic way out of this bind.