Adam Opel AG, General Motors' biggest and most important foreign subsidiary, has swerved onto a collision course with its own parent.
In the view of company insiders, GM is coming perilously close to wrecking Opel as a successful European marque by using the German carmaker as its spearhead into new world markets.
Insiders complain that the push, led by Zurich-based GM International Operations and its zealous president, Lou Hughes, has strained Opel to the breaking point by stripping it of engineering resources and talent for non-European projects.
Under the Opel banner, GM has or is building new plants in India, Argentina, Poland, Thailand and Brazil and is negotiating deals in Russia, Ukraine and China.
More ominously, they say, the shift of emphasis to other markets has put Opel dangerously behind its rivals in Europe in terms of new product development and quality.
Opel Chairman David Herman last week defended the company's international ambitions. He said the expansion is necessary because Western European car markets are saturated.
He said Opel will increase investment at home by 50 percent this year and will bring out 26 new models and model variations by the end of 2001.
But Opel sources say Herman has been waving the red flag in GM's European councils, warning Hughes to proceed more slowly with globalization. Reportedly, however, his warnings fall on deaf ears.
The issue has alarmed Opel directors. In a speech to Opel managers leaked to Germany's Capital Magazine in May, the deputy chairman of Opel's board of directors, Rudolf Muller, lambasted the automaker's shift in focus.
'Falling market share and poor quality are being answered by a shrug of regret,' Muller said. A translated copy of his remarks was obtained by Automotive News.
Muller continued, 'No new-model policy is being carried out. ... New initiatives comparable to our decision in 1989 to introduce catalytic converters are nowhere in sight. The organization is on its way to mediocrity. No one seems willing to do anything about it.'
That assessment has been echoed by Opel's own managers.
In an internal survey that was leaked to the press in early June, 75 percent of GM's top European managers said they believe the company is 'not being led effectively.'
More than two-thirds - 69 percent - said the company is pursuing its objectives 'not very successfully' or 'not at all successfully.'
The growing discord appears to have cost GM several top executives, including Opel's head of development.
Juergen Stockmar, head of Opel's technical development center in Russelsheim, Germany, quit last month. Jonathan Browning, head of GM Europe's new brand management team, also left in June, moving to Ford. And John Butler, a 28-year veteran of GM and head of personnel in Europe, left to join Textron Inc.
Stockmar had been at the center of the dispute with GM International. According to an Opel insider, Stockmar wrote a long letter to GM Chairman Jack Smith detailing the mounting problems at the German subsidiary.
Stockmar was not available for comment last week, while GM in Detroit referred all questions to Europe.
Stockmar, who had more than two years left on his contract, was closely involved in planning GM's global product range and the common platforms that will link North American and European vehicles.
Stockmar's duties will be handled temporarily by his former boss, Peter Hanenberger, who is in charge of product development for GM International.
Hanenberger, portrayed by some Opel executives as an authoritarian manager with little tolerance for criticism, was the former head of development for Opel. Sources say that because of his seniority, Hanenberger has taken some of the best and most experienced Opel managers for international projects.
They charge he also has cut funds for European cars - such as a special paint finish for the premium-segment Omega, which has caused quality to deteriorate.
Opel had to spend more than 200 million marks, or about $115 million, in warranty costs last year to repair paint chips on the Omega, which is the base of the Cadillac Catera.
Insiders say the development of the new Delta global platform that will spawn the new Opel Astra in 2004, and the Chevrolet Cavalier and Pontiac Grand Am in 2001, underscores GM's attitude toward Opel.
These executives said GM North American Operations, with Hanenberger's backing, has made a successful power grab for control of the project, to Opel's detriment.
'They are making too many changes and not leaving enough for the European car,' said one executive, who declined to be identified. 'We are worried about it.'
According to this executive, NAO is engineering Delta without regard for European needs, such as high fuel economy and the smaller exterior scale needed for a compact car in Europe.
Alarm bells are ringing loudly at Opel because Delta is the first joint car project between NAO and Europe. Executives worry that the apparent power-grab is a precursor of things to come.
Concern at Opel also is mounting because of the product offensive coming from chief competitor Volkswagen AG, whose four marques will get not only an unprecedented number of new models, but vastly improved quality.
Opel, on the other hand, has been cutting the number of variants. The top-of-the-line Senator model of the Omega was killed off with the replacement car. Production of the Vectra-based Calibra ends this month. And high-performance versions of the Corsa and Astra have been phased out.
Insiders say exciting new proposals like the Tigra roadster and Maxx city car - which was conceptualized before the Ford Ka, now in production - also were killed because development capital is being bled off for international expansion.
Without the lower-volume excitement cars Opel once had, sources said, the range is becoming bread-and-butter dull - with predictable results.
Opel's market share in Europe fell 0.6 points in the first five months to 12.3 percent as volume fell 4.3 percent. But share in its critical home market of Germany fell 1.2 points in the same period, to 15.5 percent.