Chevy rising in Europe as Opel struggles

Frank Augstein / AP

Karl-Friedrich Stracke, CEO of Adam Opel AG, sits inside the new Opel Mokka. He is struggling to restore the GM unit to profitability.

By Paul A. Eisenstein, msnbc.com contributor

The products were nearly an afterthought when Opel opened its news conference at the Geneva Motor Show last week.

Any other year, a new model like the Mokka crossover or Astra OPC would have garnered the spotlight. But when the German automaker’s new CEO Karl-Friedrich Stracke took the stage the focus was more somber  as declared his goal: “to return our European operations to sustainable profitability.”

He’d better -- and soon.  Opel ran up $700 million in red ink last year, detracting from parent General Motors, which still posted a  record $7.6 billion in profit for 2011.

Turning things around at Opel has proved far more elusive than anyone expected.  Stracke’s predecessor Nick Reilly was summarily “retired” a few months back after failing on his promise of delivering at least a break-even at the European subsidiary.

A frustrated GM has tried one option after another in recent years, hoping to turn the corner on Opel’s problems.  It has cut capacity, rolled out a flood of new products and even considered selling a controlling stake in the unit shortly after emerging from its own 2009 bankruptcy.

Now the automaker has inked an expansive alliance deal with erstwhile rival PSA Peugeot Citroen.  The two new partners insist they can not only reduce costs but also introduce an assortment of new products and powertrains that could give them a competitive edge in the overcrowded European market. But considering the Continent’s worsening economic crisis -- never mind Opel’s recent history -- skeptics abound.

“They’ve got to take out a lot of mass,” said analyst Joe Phillippi of AutoTrends Consulting, referring to Opel’s excess capacity, bloated workforce and out-of-sync cost structure.  “But any savings are likely to take time.”  At best, he cautioned, the fruits of the new alliance won’t be ripe for 18 to 24 months -- if at all.

Two decades ago, Opel was one of Europe's automotive powerhouses.  The brand was locked in a battle with leaders like Volkswagen and Ford but generated reasonable revenues and was considered a likely spearhead for GM as it opened emerging markets from Brazil to Russia and beyond.

But when GM bid to build a new plant in China, regulators there suggested the maker go to market instead with the Buick name -- reviving a brand that was a favorite of China’s last emperor as well as communist leader Zhou Enlai.

Meanwhile, as Opel began running into problems its expansion plans were scaled back, and GM shifted focus to Chevrolet, a brand long dominant in the Americas.  It even brought Chevy into Europe, using the brand to market its lower-priced, Korean made models.

Ironically, while Opel has steadily lost ground, Chevrolet has become one of Europe’s fastest-growing marques, setting one annual record after another.

Some thought Chevrolet might even replace Opel if GM had gone through with a sale of a controlling stake in Opel.

In the end, Opel stayed in the GM family, and the plan is for peaceful coexistence, insists Susan Docherty, president and managing director of Chevrolet Europe. 

“There’s absolutely room for both of us,” she insisted in an interview, noting that despite its fast growth Chevy Europe sold just 206,000 vehicles last year, barely 20 percent of Opel's volume.

Still, there have been plenty of rumors and reports in recent months that GM might again try to find a buyer for Opel. GM CEO Dan Akerson has repeatedly denied a sale is on the table. And the Peugeot alliance reveals an alternative strategy.

The two makers will cooperate on a variety of projects, including joint component and part purchasing that should shave costs by enhancing economies of scale.  Peugeot will provide new and more efficient diesels Opel can use -- critical in the diesel-friendly European market.  And the partners plan to develop new powertrains and product platforms that should reach market sometime after mid-decade.

“It’s very clear we’re looking for synergies,” said Opel chief Stracke in an interview, but he acknowledged it will take time to pull things together.

Stracke cautioned that the alliance won’t solve anything. Notably, “it’s not set up to fix anybody’s capacity problems.  Peugeot needs to fix theirs and we need to fix ours.”

He hinted that Opel is studying its options, with many observers expecting some major announcement in the coming months. That would follow previous steps that have already reduced Opel’s capacity by 400,000 units annually.

New cuts won’t be easy, especially at the maker’s highest-cost plants in Germany, where it is subject to restrictive labor laws -- and where union leaders have significant say in management decisions.  But a recent shake-up in the leadership of union IG Metall could provide an opportunity for change.

Jim Hall of 2953 Analytics is skeptical that the Peugeot alliance -- or even further production cuts -- will solve Opel’s problems.  “The more serious problem,” he says, is the maker’s weak image among European buyers, “and only product can solve that.”

That’s where the Mokka and Astra OPC come in -- along with the new Ampera, the plug-in hybrid sibling of the American Chevrolet Volt (which also is being sold in Europe).

Both Ampera and Volt got a much-needed boost last week when a jury of journalists declared them jointly the European Car of the Year. Stracke said that even before the award Opel had lined up 7,000 advance orders for Ampera, which only went on sale last month.

But it’s going to take a lot more volume than that to fix Opel’s problems. And while the new models and the new alliance will likely help, it’s anyone’s guess when GM’s European arm will finally stanch its bleeding.

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Tokyo Auto show struggles to stay relevant

Koji Sasahara / AP

A model sits on Suzuki concept car "Q concept" during the Tokyo Motor Show 2011.

By Paul A. Eisenstein

With its bright orange color and scissor doors, Suzuki not is Q concept clearly something you on the go at any time soon expect to see would - if at all.

"Ideal for daily journeys within a radius of about 10 kilometers" described as the fun is to the kind of wild, weird and crazy prototype, which has always been part of the biennial in Tokyo Motor Show.

Once one of the most important events of the automotive world, it was not even clear that it would be a Tokyo Motor Show this year. It began to lose steam in 2009, when most decided foreign automakers to show not their cars at the event. Earthquake and tsunami was complications of affairs the 11 March, to months production cuts in the Japanese automotive industry.

Tokyo Motor Show organizers try ranging all over the world back to convince automakers and automotive journalists on this year's fair. A handful of foreign manufacturers agreed, but the show 2011 was forced, on a much smaller surface area the Japanese industry as a whole move - perhaps symbolic of the problems is.

"This is a very important show and it was important for us to be here," said Martin Winterkorn, CEO of Volkswagen AG, one of the few foreign brands have become a serious presence on the show this year Tokyo, where it showed a new VW production model, the Passat all track, as well as the cross Coupe concept.

But other automakers were less impressed.

"It is hardly value, to be here," said a Senior Executive of one of the Detroit automakers, issues identified not by name. He was the show just to watch, he said, not to see the need to mount a full display his company.

The reason for Detroit restraint is obvious: while officials is open their market Japanese long afterwards passed have, it has rarely foreign brands, welcomed this year less than 20% of total sales accounted for Japanese.

The largest foreign brand in Japan, VW, controls barely 5 percent of the market. And this market is of itself a fraction.

Car sales in Japan's domestic market, have barely half of its pre-bubble economy high point for the majority of which floated past ten years. You have slowly recovered some dynamism, but some analysts expect sales per fully rebound. Partly reflects a broader shift in the Japanese mindset.

"It frustrates me," Toyota CEO Akio Toyoda to express appropriate horror he gave feels if it looks based on research that indicates that young Japanese buyers are now far less in the possession of a car than in previous generations interest.

To rebuild enthusiasm, manufacturers have a variety of options, such as for example the Suzuki Q concept and the slightly more conventional Nissan PIVO 3 been investigated.

These cars are the latest in a series of micro size vehicles which can navigate the streets of Tokyo and other major cities including Beijing, London, and perhaps even New York.

The cars are designed to leave a small ecological footprint. They are also a challenge, the limits of design. The original PIVO featured a passenger compartment which rode on a separate platform - looks a bit like a 60's era sci-fi flying saucer. Make a U-turn, would the driver simply the platform around and go the other way turning.

The latest PIVO is slightly more conventional, with body and platform, combined, but its wheels can independently control, makes it easy to scoot in even the smallest urban parking lot or turn around in almost seven feet.

Nissan CEO Carlos Ghosn says that the PIVO is "not only a show car," added that it is what sees Nissan, to "one more"realistic"EV of the near future."

So called Catalonia one already become dominant niche in the Japanese market and as this year's fair shows, automakers will put even more emphasis on going forward. This is important, when they hope that anywhere close to their current car keep up production levels.

With production largely back to normal after the natural disaster "the biggest problem we face," leading up to the value of the yen remains March, defendant Honda's CEO Takanobu Ito. At just under 75 yen per dollar, it is almost impossible for Japanese manufacturer vehicles from the House holding export to earn profit.

As a result, Honda and Toyota intend, among other things, also more production abroad. Just-in-this week, Toyota revealed that it will start production of Camry sedan for export to South Korea in a factory in Kentucky.

Toyota CEO has not being reviewed from Japanese production base, hollow, so the automaker funds told to - like Honda and others - must find a way home to pick up the slack increase sales.

But whether this will give every reason to Tokyo come for future motor shows, is uncertain.

Add the fact that the relatively open Chinese market has now become the largest national market in the world for automobiles. As a result shows motor of alternating Beijing and Shanghai are increasingly the way of the manufacturer presence - and product Debuts - line, the Tokyo used for known be.

So the extraordinary could some surprise, the last time be, that the Tokyo Motor Show even on the international stage registered.

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