General Motors has confirmed that its Chevrolet brand will no longer have a mainstream presence in Western and Eastern Europe by 2016, leaving Opel (Vauxhall in the U.K.) to serve as the General’s volume brand in those markets. General Motors Company [NYSE:GM] concedes that Chevrolet has failed to gain traction in Europe due to a challenging business model and the difficult economic situation. Europeans will still be able to buy Chevys in the future, though only iconic products such as the Camaro and Corvette performance models.
According to GM, the move will boost Opel’s sales and reduce the market complexity associated with having both Opel and Chevy in Western and Eastern Europe. In Russia and a few other European states, the two brands are clearly defined and distinguished and, as a result, are more competitive within their respective segments, meaning both will stay. In these markets, Chevy is seen as a budget brand while Opel competes in the near-premium segment.
At the same time, Cadillac’s presence in Europe will be expanded to help GM attract more premium customers. GM is still finalizing plans for expanding Cadillac in Europe and is looking to enhance and expand its distribution network there over the next three years as it prepares for numerous product introductions.
“Europe is a key region for GM that will benefit from a stronger Opel and Vauxhall and further emphasis on Cadillac,” GM CEO Dan Akerson said in a statement. “For Chevrolet, it will allow us to focus our investments where the opportunity for growth is greatest.”
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Since the majority of the Chevy lineup sold in Western and Eastern Europe is produced in South Korea, GM will increase its focus on driving profitability, managing costs and maximizing sales opportunities in its Korean operations and markets where the bowtie brand is popular. Existing Chevy customers in Europe will still have warranty, parts and services for their vehicles.
The news is another major boon for Opel, which has struggled to return a profit for more than a decade. Recently, Opel was thrown a lifeline in the form of greater access to the growing Russian car market by GM integrating its Russian operations with its European unit.