At the premier of Vauxhall/Opel’s
luxury-end concept car – the Insignia – chairman Carl-Peter
Forster boldly declared: “The Opel Insignia is an expression of
our new strength and it makes one thing clear: Opel is back.” Yet
despite the unveiling of the Insignia, the covers being taken-off the
fifth-generation Astra and the launch of the new Vectra earlier this year,
to say Opel’s comeback is complete can be deemed a little premature.
Carl-Peter Forster hopes
that the new fifth-generation Astra will help steer Opel to
profits |
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The concept Insignia which
could allow Opel access into more luxurious markets |
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Around two years ago the troubled GM brand embarked upon a turnaround
project under the leadership of Forster, after Opel reordered losses of
€227 million ($254 million) last year and €674 million ($753
million) the previous year. Codenamed project Olympia, the goal was, and
presumably still is, to return Opel to profits by the end of 2004. A job
that has been made all the more difficult due to the tough economic climate
ahead, with Forster already bracing himself for yet more losses by the
end of this year.
“What we said then [mid 2001] was that this year we would still
show a loss, and this is something that we always said. We also said at
the time that we would like to see profits in at least one quarter, and
according to Rick [Wagoner] we have already achieved this. But for the
year in total, it will not be a profitable year for us. But then we never
expected that and we never set out to do that.”
| Just how bad 2003 will turn out for Opel remains to be seen, with
Forster opting to remain canny as to possible predictions: “Honestly
I don’t know and I’m not ready to comment on this as there
are too many variables that we still don’t know about,”
he says. |
Yet Forster is quietly confident that 2004 will be the year when Opel
finally jumps from operating in the red to being in the black. He adds:
“There will be profits next year and I’m confident of this,
[especially] if the market does not continue to almost collapse. So we
hope that Opel will finally see a recovery next year.”
The ramifications for Opel failing to return a profit to its GM masters
by the end of next year bears not even thinking about, with Foster only
adding: “We have to discuss this issue with Rick Wagoner. However,
this is a hypothetical case and there’s nothing we can talk about
now.”
One reason why Forster is confident that Opel’s comeback will be
completed in less than 15 months is due to the launch of the all-new and
all-important fifth generation Astra. He says: “[The Astra] is one
of three car lines that’s important to Opel at the moment. The Astra
is one of the legs on a three-legged stool for Opel and it certainty should
not collapse, otherwise the stool will not stand-up anymore.”
Yet Opel’s expectations for the new Astra remain realistic and achievable.
The chairman clearly expects the new Astra to build on the success of
its predecessor, despite Forster claiming there are no early sales expectations
due to it being the car’s “launch year.”
| He explains: “I don’t think we would be satisfied if
we did not receive a better segment share with this car over the previous
model.” |
As with the current Astra range, there will be a plethora of derivatives
and models that follow the launch of the new five-door variant next year.
Forster confirms: “Following this, there will be a estate with a
longer wheel base, there will be a convertible and also a highly sporty
three-door version that we already hinted at with the GTC Geneve concept
car at the Geneva Show in spring.”
An MPV-derived Astra is, however, out of the question. “No, I can’t
say about an MPV, the question is whether it will be a derivative or not.
Most probably, if we do an MPV then it will not be a derivative from this
vehicle.”
However, it’s unlikely that a smooth passage into the marketplace
will beckon for the new Astra, adding to Forster’s woes. The Astra
will not only compete in a shrinking C-segment market with fresh competitors
like the VW Golf and Ford Focus, its launch date has also been timed with
one of the toughest economic periods for the automotive industry.
Yet Forster remains upbeat. “One has to expect that the C-segment
market will continue to shrink, but in this segment we would like to gain
a better segment share than the previous model.” And despite Forster’s
earlier worries of the market “nearly collapsing,” the chairman
insists the Astra can enjoy a good start to life.
“I actually think it’s quite the opposite,” he explains.
“Everybody is waiting for the new Astra and we are highly motivated
to bring it to market, so I think this is a good environment.”
Forster’s business case for launching the Astra in such a difficult
time actually makes sense. He explains: “If you look at today’s
economy, people have become much more cost conscious and they’re
turning the Euro round twice and three times before they spend it. So
the new Astra, and such a vehicle like this, will do good in such a market.”
| Another factor in Forster’s claim that Opel will return to
profit by the end of next year is due to the carmaker’s heavy
expansion in new and emerging markets. He continues: “I think
we will be a brand that is well positioned to take full advantage
of emerging markets in the east.” |
Yet Forester’s “east” does not stretch as far as China.
“I think both from our ability and our image perspective, the Opel
brand has traditionally done well in central and eastern European markets
like Russia, Poland, Slovakia and Hungry. I think in those markets we
are very well positioned and those markets also have very strong potential.
So with these markets growing in importance, one might see a gradual shift
in sales pattern into the east. I’m not saying that we’re
losing [our foothold] in the west, but the east is gaining in importance.”
GM’s recent alliance with Russian carmaker AvtoVaz has fuelled rumours
that points to a Russian built Astra for the central and eastern European
markets, though Forster says that no official decision has yet been made.
He says: “It’s an option that we’re looking into, but
so far the possibility of this venture is not sufficient. We still have
to look at this business case and then take a decision.”
Yet it would seem that a Russian built Astra is very likely, especially
as Forster says that Opel’s problem is that it’s “overstretched,”
an issue first highlighted a few years back. He claims that Opel –
in certain low price markets – finds it hard to compete, especially
in not being able to go as low in price as the local market needs. This
leads one to think that a Russian built Astra for east and central Europe
would be more apt than the expensive version destined for western Europe.
His response is subtle to such a theory: he shrugs his shoulders, laughs
and says: “We’ll see.”
| The Opel chairman is equally dismissive of the cannibalisation theory,
with some low-price market slots presently covered by European built
GM cars possibly being replaced by GM Daewoo models. |
“I always feared for Opel because in some areas it was overstretched
in certain areas of the world. Opel always has traditionally had a premium
aspiration, but yet had to compete on prices in some countries. So I feel
from a General Motors perspective, there’s a clear advantage to
cover the various price and customer segments around the globe.
“You might see that here and there we might be losing some customers
to Daewoo, but so far there’s not been much of that. On the other
hand, it’s rather an opportunity, and I’m very positive of
the new setting-up of GM brands. It’s in the family and we’re
benefiting. If one day customers go from Opel to Daewoo, then so be it,
but the total set-up is much more robust.”
And as with relations with Saab, whom Forster prefers to call a “matrix
organisation” as opposed to it being a single European organisation
for two GM brands, he also says that life with Italian carmaker Fiat has
also started well.
“We have a good, solid and contractual agreement with Fiat,”
comments Foster, who adds that the powertrain joint venture is “working
well for both sides.” Yet the development of two highly acclaimed
diesel units – 1.3 and 1.9 litres – is just the start of things
to come. “You will see more from this collaboration. More engines
and more gearboxes and I think that is very positive.”
But for Forster, the Insignia is symbolic proof that Opel is on the right
tracks: the comeback trail. With the Omega soon to be retired, the luxury
market is an area Opel wants to be in, especially if it is to be profitable
next year.
“I think the issue is to do with volume and what sort of volume
expectations one has. We don’t know what sort of volumes we could
and should go after, but we believe that the upper mid-sized segment is
an interesting segment and we believe that this is an opportunity we should
not miss long term.
“I also think that this has some significance for the brand as well,
and we should do our best to exploit our opportunities in this segment.
Now, I can easily state that we will not sell this vehicle in the volumes
like the Mercedes-Benz E-Class, but it can still be an interesting move
for us into this segment.”
In fact, it is an interesting time for Opel, and yet despite the new Vectra,
newer Astra, Insignia, branching into new markets and the apparent success
of project Olympia, the question still remains whether the German carmaker
can turn a €674 million loss into a profit in three years. For Forster,
the months are literally ticking away.
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