GM’S Opel Adam targets Europe
General Motors Co.’s unprofitable Opel division has started production of the Adam small car, named after the 151-year-old brand’s founder, in a bid to win back European customers amid a recession on the continent.
Opel invested $248 million to prepare its factory in Eisenach, Germany, which also builds the Corsa hatchback, to make the Adam, interim Chief Executive Officer Thomas Sedran said during a presentation at the plant. The model is being marketed as giving buyers a choice of as many as 61,000 exterior and 82,000 interior-design combinations.
GM’s losses in Europe since 1999 have totaled $17.3 billion. The Detroit carmaker has a target of bringing the operations to breakeven by 2015. Sales by Opel and its U.K. sister brand Vauxhall have fallen faster than European industrywide deliveries have contracted, cutting the divisions’ combined market share to 6.7 percent in the first 11 months of 2012 from 8.4 percent for all of 2007.
“The Adam plays an important role as a sign of life for the Opel brand,” said Christoph Stuermer, an analyst at IHS Automotive research in Frankfurt, Germany. “From a volume point of view, the Corsa is much more important,” with Opel likely to sell one Adam for every 10 deliveries of the older model.
Adam’s price
The Adam is priced starting at $14,800 in Germany, compared with $12,800 for an entry-level version of Volkswagen AG’s competing Up! city car and $15,000 for the retro-designed 500 model made by Fiat SpA.
The GM division, based in the Frankfurt suburb of Ruesselsheim, is encouraging Adam purchasers to order the car from dealers rather than buy it on the spot. Options enable drivers to choose different colors for separate external parts and trim as well as a range of materials and lighting for the interior.
Customers ordering an Adam can be certain that they “won’t see an identical car,” and “almost every Adam will be unique,” Sedran said.
“It’s likely that we’ll see more Adam derivatives, but there’s been no decision yet,” he told journalists following the event.
The design range compares with 500,000 potential variations offered for the Fiat 500, according to Claus Witzeck, a spokesman in Frankfurt for the Italian company.
Expanded lineup
Opel is introducing 23 vehicles from 2012 through 2016, including the South Koreabuilt Mokka compact sportutility vehicle, which went on the market in October, and the Cascada convertible, which Sedran said will go on sale this month.
The new models are part of a global GM strategy that includes refreshing 70 percent of its U.S. brands’ lineup over a year and a half. Opel faces an extra challenge: European carmakers’ sales are set to shrink for a sixth consecutive year. GM CEO Dan Akerson told reporters in Detroit that he sees Europe’s market weakening, and that “Germany looks like it could be slipping into recession.”
European industrywide deliveries will probably fall 4 percent in 2013, Sedran said, adding that Opel is unlikely to gain significant market share this year.
The German division was founded as a bicycle and sewing-machine manufacturer by entrepreneur Adam Opel in 1862, and it began making cars about four decades later. GM bought an 80 percent stake in 1929 and gained full control two years later.
Peugeot partnership
GM’s efforts to revive profit in Europe include setting up a vehicle-development partnership last year with PSA Peugeot Citroen, Europe’s second-biggest carmaker, while scaling back production at older factories. The cooperation has prompted speculation that Parisbased Peugeot may combine with Opel.
“Opel is not for sale,” Sedran said, reiterating earlier statements by GM executives. The cooperation with Peugeot “is just a beginning,” and “we see a couple of additional projects that are possible.”