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GM Adds Product to Opel Facilities, Will Pull German Brand From China

Executive Summary

Discontinuing Opel in China would eliminate the risk of the two brands competing for the same customer. GM says its 22 Opel dealers in China sold 4,365 vehicles last year, whereas Buick sold 810,000 vehicles from its 650 stores.

General Motors says today it will invest €245 million ($337 million) into its Ruesselsheim, Germany, assembly plant to build an additional Opel product and a vehicle slated for export to North America under the Buick brand.

The move will increase the Rhein-Main assembly plant’s capacity utilization, making it a more profitable operation for Opel, GM says.

“With the investment in a new, additional model for Ruesselsheim, we will take another important step in our multi-billion-dollar model offensive with which we will pave the way for Opel’s profitable growth,” GM President and Opel Supervisory Board Chairman Dan Ammann says in a statement.

GM is investing a total of €4 billion ($5.2 billion) into Opel’s turnaround, a plan that calls for 23 new products and 13 new powertrains in the region through 2016.

The North American Buick, which Ruesselsheim will add alongside a new variant to the Opel Insignia later in the decade, would be the second go-around for the brand at the assembly plant. Ruesselsheim built the Regal midsize car for export when production of the latest-generation model launched in 2010. Production moved to Oshawa, ON, Canada, in 2011 and continues there today.

“The decisions of the Supervisory Board for the production of a Buick and for the investment in an additional model for the Ruesselsheim plant are based on the recently concluded collective agreement,” says Wolfgang Schaefer-Klug, head of the Opel Works Council and deputy chairman of the Supervisory Board.

GM also announces today plans to discontinue selling the Opel brand in China next year, a decision Opel CEO Karl-Thomas Neumann calls overdue.

“It would have cost hundreds of millions of euros to raise awareness of the Opel brand and to expand the distribution network,” he says. “Buick, however, is one of the market leaders in China and we plan to intensify our future collaboration, with several projects currently under examination.”

Discontinuing Opel in China would eliminate the risk of the two brands competing for the same customer. GM says its 22 Opel dealers in China sold 4,365 vehicles last year, whereas Buick sold 810,000 vehicles from its 650 stores. A number of those were products co-developed with Opel, GM notes.

Pulling Opel from China comes after a decision last year to remove Chevrolet from Europe, which was seen hindering Opel’s turnaround.

Ruesselsheim presently builds four variants of the Opel Insignia, which shares its architecture with the Regal and the Zafira MPV.

The investment announcement marks another step in the turnaround of Opel, which has not been profitable for GM in 14 years. At one time Opel and Volkswagen competed for sales leadership in Europe, but a dearth of product at the GM unit saw its deliveries decline to 738,411 units last year, according to WardsAuto data. Volkswagen delivered 2.1 million.

But Ammann told WardsAuto at the Geneva auto show earlier this month a slight year-over-year market-share gain in 2013 signals progress is being made.

“A small, but important milestone,” Ammann said of the share improvement. “There’s no doubt we’re making some real progress.”

jamend@wardsauto.com

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