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Opel was until recently General Motors' main car-making subsidiary in continental Europe, and the group's largest division outside North America. It operates in the UK under the name Vauxhall with a virtually identical model range. The business has been plagued by problems for two decades. Opel is currently the weakest of Germany's five heritage brands, sitting behind Volkswagen, Mercedes, BMW and Audi, and repeated attempts to turn performance around have so far failed to deliver lasting results. The global economic crisis of 2008 came close to forcing GM to cut loose its ailing subsidiary altogether. As GM itself struggled on the brink of bankruptcy, Opel too faced collapse unless it received emergency funding from national governments in the various European markets in which it operates. A draft deal was agreed to sell majority control of the business to Russian and Canadian investors. Yet after months of drawn-out negotiations, that plan was abruptly cancelled by GM's board just days before signature. Instead GM vowed to keep hold of the business, with the hope of achieving a slow but steady recovery. However, years later, only a minimal turnaround had materialised. In a dramatic new turn of events, GM agreed in 2017 to sell Opel to rival PSA of France for a rock-bottom €2.2bn.
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After taking the decision to keep hold of Opel in 2009, General Motors was involved in prolonged negotiations with labour unions to find a way of reducing costs. In 2012, it confirmed that it would close Opel's oldest plant in Germany at Bochum. The news was significant in that it marked the first closure since World War II of any major German automobile factory. The site was subsequently redeveloped as an auto parts distribution center. Other sites have also closed.
The group also agreed a strategic alliance with another troubled European manufacturer, PSA Peugeot Citroen, to jointly develop new vehicle platforms and pool resources over purchasing. That arrangement, though not at first very productive, eventually blossomed into the agreement of GM to sell Opel and Vauxhall to PSA in 2017. PSA paid just €1.3m for the manufacturing division, half in cash and the other form in warrants for PSA shares after 2021. The Opel Bank financial services business was jointly acquired by PSA and BNP Paribas for an additional €900m. The sale completed in August 2017.
Opel now operates six production and assembly plants in Western and Central Europe, in Germany, Spain, the UK and Poland; and sells directly in 22 local markets. In the UK, the business operates for historical reasons under the name Vauxhall, but the model range for both brands is virtually identical. The company is traditionally known for conservative, if not slightly dull, mass-market cars. In an attempt to "sex up" its image, the company unveiled revamped designs for several key models between 2003 and 2008. The Insignia, a sports saloon introduced in 2008, was named as European Car of the Year for 2009. Another bright hope for the future is the Ampera, the group's first extended range electric vehicle, launched in 2012 and based on the same technology as the Chevrolet Volt, which launched in the US in 2010. However so far, that model has merely fizzled. The Mokka sub-compact SUV was introduced at the end of 2012, followed by the Adam urban mini and Cascada convertible in 2013. Another addition to the family is the entry-level Karl mini, introduced in 2015. The Crossland X and Grandland X crossovers launch in 2017.
In 2007, the Opel/Vauxhall division of GM Europe reported its best sales figures since 2001, totalling 1.63m vehicles. However it was unable to maintain that position in years that followed. As sales fell in Western Europe, they were temporarily offset by strong performance in Eastern Europe, but that rally also failed in 2009. By 2011, combined sales across the region had fallen to a low of under 1.1m vehicles, and bounced around that level for the next few years. The total finally rose back above 1.1m in 2015, reaching 1.16m units for 2016.
Opel's best-selling model in 2015 was the Corsa small hatchback, with sales of almost 290k units. However it was narrowly overtaken once again in 2016 by the new generation Astra, sales of which jumped by 25% that year to almost 288k units, following its selection as European Car of the Year. Corsa slipped to 284k. The strongest of the group's new models is the Mokka, now the group's #3 model with 170k units. All other brands were under 100k units. They include the Insignia sedan (81k), Vivaro midsize van (66k), new Karl (57k), Zafira tourer (54k) and Adam (53k). The Corsa, Astra and some other models are also manufactured in or exported to Latin America and Asia, where they have traditionally been badged as either Opel or Chevrolet.
Of the group's 44 European markets, the two strongest by far are the UK and Germany. Traditionally GM Europe's biggest market, Germany has endured a steady decline in performance for well over a decade. In 2007, Opel's unit sales in Germany fell below 300,000 for the first time in recent history, and have continued to slide ever since to a low of 217k in 2013. There has been a modest recovery since then, to 259k cars and light vehicles in 2016, but the brand now runs the risk of being overtaken in the passenger car segment by Ford, now only 4,000 units behind. (Ford is already bigger by total volumes with 284k units including commercial vehicles). Opel's top-seller was the Astra, the #5 car in Germany, accounting for over a quarter of volumes (65k units), followed by the Corsa at #10 (55k). The Astra was the only other model in the Top 25 at 46k units, while the Mokka scraped into the Top 30 at 32k.
As a result of the sales slide in Germany, the UK has become Opel/Vauxhall's biggest market, with sales of 251k cars in 2016 and 38k commercial vehicles. Italy is a distant third at 102k total units, followed by Spain at 97k, France at 75k and Turkey (55k). Following dismal performance in 2014 in Russia - once Opel's #3 market - the group withdrew from that country altogether by the end of 2015.
The group has associated with music entertainment in recent years, sponsoring a regional tour in 2011 by singer Katie Melua, as well as German Eurovision winner Lena Meyer-Landrut. Other celebrity ambassadors include supermodel Claudia Schiffer and football manager and ex-player Juergen Klopp.
GM hasn't enjoyed a profit from its European business since the late 1990s, and losses since 2000 have averaged $1bn per year, despite years of further cost-cutting. The loss for 2016 reduced to $257m (from $813m in 2015 and $1.4bn the year before), but revenues were flat at $18.70bn.
Adam Opel set up a factory in Ruesselsheim, Germany, in 1862 to make sewing machines.. As the factory grew so did the range of products it made. Bicycles were added in 1886, but business began to decline by the following decade. In 1899 the founder's five sons acquired a nearby engine factory owned by engineer Friedrich Lutzmann, and later that year Opel turned out its first automobile under the Opel-Lutzmann marque. Wilhelm and Fritz Opel split from Lutzmann in 1901 and acquired the license to produce cars for French company Darracq. In 1910 they successfully launched their first own brand model, the Opel 10/12 HP. The car was generally admired, and Opel stepped up production with the goal of expanding as rapidly as possible in order to undercut leading manufacturer Daimler-Benz by producing mass-market, more affordable cars. The plan worked and by the beginning of World War I Opel was Germany's leading auto-maker. In 1924 the company was the first in Germany to adopt US-style assembly line mass production, reducing costs further and adding speed.
GM was already active in Europe. In 1919 the company had acquired small UK truckmaker Bedford Motors, and built its first non-US car assembly plant in Denmark five years later. Adopting the same aggressive policy that had given it dominance of its domestic market, GM then began to buy up local European passenger car manufacturers, starting with another British company Vauxhall Motors in 1925. In 1931, General Motors acquired an 80% holding in Opel as its principal base in continental Europe, and bought out the remaining shares two years later.
During the 1930s, production at Opel grew exponentially. In 1935 the company introduced all-steel integrated bodies on the new Olympia model, reducing costs and speeding up assembly. A year later Opel had become Europe's biggest manufacturer. Its Kadett model was replicated worldwide by GM's other manufacturing operations, and in 1939 the one millionth vehicle rolled off the production line at the main factory at Ruesselsheim. That year, the company suspended car production and was obliged to produce trucks and parts for the German army. The main factory was destroyed in 1944, but was rebuilt post-war to manufacture civilian trucks.
Passenger car production restarted in 1947 and within six years production levels were back to 100,000 vehicles a year. The group blossomed throughout the following decades, despite increasing competition in the middle market from Volkswagen. When GM's UK subsidiary Vauxhall faltered in the 1980s, the previously independent business was placed under the control of Opel's US-born boss Louis Hughes, who played a large part in steering the British company back on course. Increasingly the two car brands began to share platforms. In 1975, the Opel Ascona family car was launched in the UK as the Vauxhall Cavalier; from 1987 onwards even the names were the same as the Calibra, Corsa, Vectra and others all made their appearance in both markets. The only difference (apart from which side the steering wheel was fitted) was the separate badges of Vauxhall and Opel.
But after Hughes' departure in the early 1990s, Opel lost its way. GM issued instructions to extend the brand into the international market, and as a result investment was diverted from the local market and into the opening of plants as far afield as India, Japan and Taiwan. The lack of new models and a dull image allowed Volkswagen to power ahead in Germany. Despite record sales in 1997, Opel reported an operating loss as a result of restructuring and rebuilding costs. There followed a series of management upheavals as a string of senior executives were appointed and then moved on. Worse still, one senior manager jumped ship to VW, taking seven colleagues with him as well as sensitive company information. Opel sued and the ensuing court-case lasted four years. VW finally paid substantial damages but it was an embarrassing distraction from the main job of building cars.
As friction increased between Opel's management in Germany and the parent company in Detroit, the company's market share in its home market nose dived. This tension worsened with the news of GM's equity stake in Fiat, which led to an outcry from both management and workers that it would lead to a further erosion of Opel's position. A call for 5,000 workers to be transferred from Opel to a Fiat joint venture in early 2000 led to a walk-out at the main German factory. In a bid to recapture market share, Opel launch. In a bid to recapture market share, Opel launched a series of new models and launches, designed to get the company out of the middle market of cars for salesmen and families. A new version of the Astra in 1998 began the process, which continued with the launch of the Agila minivan and VX220 Speedster. The company also celebrated its centenary with the launch of the Opel Live exhibition at its Ruesselsheim HQ. However huge investment continued to generate losses.
As a result of tensions with local unions the group was forced to limit job cuts to 2,500 employees, and instead is having to find alternative ways of improving profitability. These include asking suppliers to take on a greater share of development costs, and tighter inventory control. advertising in Europe was centralised into a single standalone agency, newly formed McCann-Erickson Brand Communications. The car operations posted further losses in 2001 and 2002. Hopes of a return to profitability by 2003 were later dashed by continuing poor performance in Germany. A further restructuring was launched in 2004, with the planned loss of 12,000 more jobs, mainly in Germany.
In May 2009, as the main GM business teetered on the brink of bankruptcy, the German government brokered a deal to transfer control of Opel and Vauxhall to a consortium led by Canadian car parts manufacturer Magna, Russian manufacturer OAO GAZ Group and state-owned lender Sberbank. Magna already has production facilities in Europe, where it assembles vehicles under contract for other manufacturers. It has close ties to OAO Gaz of Russia. Under those plans, GM would have retained a 35% shareholding in Opel and Vauxhall; Sberbank would also control 35%, while Magna would hold 20%. The remaining 10% would be transferred to an employees trust. The German government agreed to supply around $1.5bn in interim funding to keep GM Europe float until the deal was completed.
However, GM's board dithered for months over the deal, fearing the implications of creating a new global rival. Alternative arrangements, one of which would allow GM to buy back the business at a later date and another to keep it with financial assistance from European governments, were also explored. In the end, though, GM's hand was forced by the German government, which in the run-up to crucial local elections refused to give its own support to any alternative deal that might result in job losses. That position raised concerns on the part of Europe's competition commissioner, and with the anticipated completion date only days away, GM took the decision to abort the sale. It had hoped instead to secure €3bn of funding from governments in Germany, Poland and the UK. That plan too was dealt a severe blow in June 2010, when the German government refused to provide a federal loan, telling GM to fund the restructuring from its own resources.
Following its decision to retain Opel, GM overhauled the management structure of its GM Europe business to create a single team headed by CEO Nick Reilly. Opel's former managing director Hans Demant moved to a new role as VP, GM global intellectual property rights. In 2011, Karl-Friedrich Stracke was appointed as CEO of Opel/Vauxhall, reporting to GM Europe chief Reilly. Stracke succeeded Reilly in Spring 2012 as president of GM Europe. A few weeks later, however, he was dismissed mid-way through delicate negotiations with the German carmaker's unions. He was replaced for a period by Thomas Sedran, previously operations director. However Sedran was shifted in 2013 to a new role as president of Chevrolet Europe. Former VW executive Karl-Thomas Neumann was appointed as regional EVP & president for Europe and chairman of Adam Opel at the beginning of 2013. Following the sale of the business to PSA in summer 2017, Neumann stepped down, to be succeeded by former CFO Michael Lohscheller.
Last full revision 10th March 2017
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