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GM Pulls Opel Out of China; Will Play Larger Role in U.S.

New move in global brand realignment.

by on Mar.31, 2014

The Opel Adam S is not going to be available in China as GM is pulling the brand out of the country.

As part of a continuing global brand realignment, General Motors has pulled Opel out of China. The move comes barely a month after the Chevrolet brand was yanked out of Opel’s home market in Europe.

German-based Opel has been struggling to gain traction in China since entering the market there two decades ago. Even though GM is the second-largest manufacturer in the Chinese market – generating 3.16 million sales in 2013 – Opel’s 22 dealers sold a mere 4,365 vehicles there last year.

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But Opel won’t vanish entirely. Its product engineering operations will continue to assist in the development of new products for China – as well as for the U.S., Opel announcing it will produce a new model for Buick that will be exported to the States later this decade.

“This is a long overdue decision,” said Opel CEO Karl-Thomas Neumann in a statement. “Buick, however, is one of the market leaders in China and we plan to intensify our future collaboration, with several projects currently under examination.”

At the time Opel entered the Chinese market in 1993, the European brand was being groomed to become GM’s primary global marque. But those plans soon fell apart as Opel failed to gain traction in other parts of the world – and as it began to falter in Europe. By the time GM emerged from its bankruptcy in July 2009, it began looking for a buyer to take control of Opel, though it ultimately backed out of a deal that would have sold majority control to a Russo-Canadian consortium led by Toronto-based auto supplier Magna International.

GM has been realigning its brand strategy since its run through Chapter 11, among other things abandoning the Pontiac, Saturn, Saab and Hummer marques. Then, earlier this year, it announced it would pull Chevrolet out of Europe, ending a failed experiment to position Chevy as a low-level line to permit Opel to move more up-market.

Opel has begun to regain some traction in Europe, with strong demand for its new Adam small-car line. But it has failed to gain ground in China, now the world’s largest automotive market. Instead, GM will now focus on Buick, Chevy and its home-grown Baojun brand, while also nurturing Cadillac, a relative latecomer to China’s booming luxury segment.

Buick was GM’s first global brand to enter China and while the maker has expanded its product development operations in Shanghai, future vehicles are expected to tap engineering and design resources from around the world – including those of Opel in Europe.

(GM adds millions to recall list. For more, Click Here.)

In fact, Opel could play a growing role globally. It will provide a new Buick model to the U.S. market, according to the updated plans. GM says it will invest 245 million Euros, or $336 million, to help build that and another model at the Opel factory in Ruesselsheim, Germany. The factory currently produces four different versions of the Opel Insignia, as well as the Zafira Tourer model.

(Click Here for details about the 10% pay hike received by Ford’s Alan Mulally in 2013.)

As for China, GM plans to invest $11 billion by 2016 in a bid to regain the sales lead there. It lost that crown in 2013 to Volkswagen AG for the first time in nine years.

(To see more about GM halting Chevy Cruze sales, Click Here.)

Among other global moves, GM recently announced that it will end production in Australia due to the country’s high cost of manufacturing. Toyota and Ford, the other remaining producers in that country, also plan to pull out over the next several years.

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