10 things Opel's new CEO must do
|Harald Hamprecht is Editor-in-Chief at Automotive News Europe|
Opel: The successful brand with 17 percent market share, state-of-the art products and a cash cow for its parent General Motors.
That was two decades ago. All of it changed when former purchasing boss Ignacio Lopez slashed costs and sacrificed quality. Four weak U.S. CEOs were installed and launched inferior cars. Instead of devoting its full energy to its core European brand, GM subsidized its notoriously loss-making Swedish brand Saab and wasted resources on multiple attempts to launch Cadillac in Europe.
The result: Hardly any other brand saw its market share plummet as much as Opel. In Germany alone, Volkswagen sells more Golfs than Opel's entire product lineup. VW's market share now sits at 22 percent in Germany; Opel is just 7.8 percent. In 2009, GM was almost forced to sell or shut down Opel during the U.S. automaker's bankruptcy. In April, Karl-Friedrich Stracke, 55, an Opel man since 1979, an engineer and car guy at heart, took over. Stracke wants to establish a "new Opel." How? Mr. Stracke, here are your 10 to-dos:
1. Speed: Let 'er rip and walk the talk! Your predecessor Nick Reilly said Opel would break even this year and achieve sustainable profitability by 2012. GM CEO Dan Akerson is running out of patience. GM's share price is suffering from the weak performance of its operations in Europe. Time to fix it. Quickly!
2. Product: Opel must make the best use of the 11 billion euros in product investment planned by 2014. The new Corsa will be the most important newcomer. It's one of the brand's main pillars along with the Astra and Insignia. Opel must put even more emphasis on design. Opel's new entry-level car, code-named Junior (due in 2013), must look great – not just like a mix of a Fiat 500, Citroen DS and a Mini. Further up the portfolio, Opel's planned coupe and convertible had better be real head-turners. A new flagship might arrive in four years, but you cannot wait for this halo car to change the brand's perception or improve its balance sheet.
3. Headcount: To adapt its labor costs to its eroded market share, Opel has slashed capacity by 20 percent and killed more than 8,000 jobs. Now it's time to fill the holes that the restructuring has created. Opel has already started to hire new engineers, designers and fleet managers and they had better be great performers.
4. Pricing: Opel's cost structure is still an issue that greatly affects price positioning, margins and the bottom line. Although overcapacity has been eliminated, Opel still has to improve production efficiency. By the way: Was it a wise decision to build the Junior in Eisenach, Germany? Successful competitors produce small cars in low-cost countries. Something to be kept in mind when determining where the next Agila (due in 2014) will be built.
5. Alliances: Opel's partnerships must be carefully assessed and maybe there should be some new ones. For example the next Agila should be based on a GM architecture, instead of Suzuki's technology.
6. Intra-brand competition: Opel must be defended against GM's other brands. Why should Chevrolet sell the Volt in Europe when Opel wants to use the Ampera, the Volt's sister model, as a way to build a green image?
7. Dealers: Possibly one of Opel's biggest shortfalls after it was slashed by former sales boss Uhland Burkart from 2001 to 2004 is its retail network. Current sales chief Alain Visser recently admitted: "Our weakness is that we are too bureaucratic and complicated. The difference between a good and a bad dealer network is 1 percent market share." Visser has started a "unique retailer experience" program for Opel's 4,600 dealer outlets in Europe. Hyundai-Kia shows how it works (page 14). The irony: Former Opel sales executive Werner Frey is boosting Hyundai's sales in Germany.
8. Spirit: Frey left Opel in 2002 and laid the groundwork for Hyundai's success in western Europe. Other high-level Opel executives have jumped ship recently. Ex-Opel boss Hans Demant is now a vice president at VW; and former head of product planning Frank Weber will soon start with BMW. Coincidence? Rather a cry for internal communication and motivation for battered souls. Only proud employees are good brand ambassadors. Opel is a steamboat with 40,000 employees. The new captain has to change tack to boost team spirit and to improve cross-functional cooperation (also at board level).
9. Internationalization: Don't seek salvation abroad, first you have to regain strength in your home market. How will Opel ever become profitable in markets like Australia with just a few thousand sales? Why does Opel try to gain ground in China? GM is well represented there with Buick and Chevrolet. It would cost a fortune to build up a brand image and a dealer network there. GM is better off paying royalties to Opel for every Astra sold in China.
10. Brand: Is Opel's new advertising campaign improving the brand image? Or using singers such as Katie Melua as brand ambassadors? Better invest in your employees and in product. The strategy to position Opel as a green leader is smart – with cars like the Ampera and hybrids in the pipeline, with fuel-saving stop-start systems being rolled out on all major models this year. On the other hand the brand lives from emotion. So Opel should quickly strengthen the successful OPC line and start a new motorsport engagement, such as entering the German Touring Car Masters (DTM). Of course, winning is the only option if you want to get rid of a loser image.
Opel has huge potential. It has a 112-year heritage and a brand equity matched by only a few other automakers. But Opel really has to shift to offense from defense. Or as a German would say: Attacke, Herr Stracke!