General Motors

Taking Opel Global

Not your grandpa's Buick. Source: GM
Not your grandpa's Buick.
  • Why it matters

    Why it matters

    Opel has struggled for years under GM leadership, unable to fully tap the lucrative North American market.

  • Facts

    Facts

    • Opel’s convertible, marketed under the Buick brand, generated excitement in Detroit recently.
    • Holden will sell three Opel models in Australia.
    • GM wants most of its global production to be on core vehicle architectures.
  • Audio

    Audio

  • Pdf

Buick is making a convertible again? News that General Motor’s conservative U.S. subsidiary was putting the top down for the first time in two decades made waves at the Detroit Auto Show.

But German observers had a different take on Buick’s “new” Cascada model: It was no different than the Cascada made by GM’s German unit Opel, which has been available in Europe for a year and a half.

Importing German engineering to revive Buick is part of GM boss Mary Barra’s plan to have 99 percent of the carmaker’s global production based on the same platforms by 2020.

“GM’s strategy is to build more cars with fewer platfroms to lower development costs,” she said.

The competition is already considerably further ahead in that regard. Germany’s Volkswagen, which was number two in the world last year by sales, directly ahead of General Motors, has already produced two million cars since 2012 on its MQB modular platform. That number is expected to rise to four million cars by 2016 and seven million by 2017.

Volkswagen subsidiary Audi is supplying another (MLB) platform, from which a number of models across the VW group are profiting.

The Cascada is the third Opel model to be sold under the Buick name, following the Insignia and the Astra, making half of the Buick models structurally identical to Opel’s German models.

The new Astra, which Opel will present in the fall, could make its way to the United States or China as a Buick.

The partnership initiated a year and a half ago has being well received by American drivers. Sales for Buick, often considered a car for senior citizens, rose 11.4 percent in 2014. And the drive to make Buick more European is just getting underway – the Opel factory in Poland will start producing the Cascada for the U.S. market next year.

Similarly, new variations of the top model Insignia will be launched “later this decade,” according to an official statement by Opel, and then will be sold as the Buick Regal in the United States. The Regal currently offered in North America is produced in Oshawa, Ontario.

In China, a modified version of the Opel Astra has been sold for years under the Buick brand name.

And the new Astra, which Opel is presenting in the fall, could eventually make its way as a Buick into the United States or China, according to sources in the industry. There are no official budget figures, and the GM subsidiaries don’t make their internal calculations public. But it is clear that it is worthwhile for Opel to have more spin-offs of its own models out there in the world.

Taking Opel Global-01

The new Buick distribution channel means a big boost for Opel’s production. Between 5,000 and 15,000 Buick Cascadas could be sold per year, said Karl Brauer, an analyst at Kelley Blue Book. Even in the worst case that would translate to a doubling of the current number produced. And the potential for Opel’s Insignia and Astra models is much higher – the 750,000th Insignia rolled off the assembly line this week, seven years after its introduction.

Buick will not be the only GM subsidiary to sell Opels under another name in the future. This year, the first Astras, Insignias and Cascadas are to be sold in Australia under the Holden brand. Holden has the same problem as Toyota and Ford, in that production in Australia is hardly affordable because of the strength of the Australian dollar. All three of them want to cease production there by 2017.

At Opel, CEO Karl-Thomas Neumann is looking more at margins than at quantity when it comes to this project. Only high-horsepower cars will be sold in Australia. The German carmaker hasn’t forgotten the failure last time in Australia, when it failed to sell even 1,000 cars in its first six months, under the Opel brand name.

Selling them under Holden should be much easier, as the brand has more than 200 dealerships and a market share of more than 10 percent.

Christian Schnell covers the auto industry for Handelsblatt. To contact him: schnell@handelsblatt.com

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