When General Motors and Fiat Auto announced plans in March for an alliance, speculation in Europe ran rampant. One news report even had Robert Hendry, chief of GM's Opel unit, getting fired. But Hendry remains in charge, and he makes it clear that he will guard Opel's identity as a provider of affordable technology. That means maintaining Opel's engineering capability, resisting pressures to move upscale, and casting a cold eye on proposals for joint Opel-Fiat dealerships. Staff Reporter Diana T. Kurylko got an update during an interview with Hendry. An edited excerpt follows:
What is causing this latest round of talk that there is friction at Opel?
Beats the heck out of me. I don't know. There was speculation that Mike Burns was going to fire me and that I was going to be the scapegoat for GM Europe. I looked at it and I am thinking, `Wow, it's coming out of the blue.' It's unbelievable to me and everybody.
How is morale?
I would say, except what for a lot of stuff going on in the paper, morale is good. Obviously, that kind of stuff raises a lot of concern but not necessarily for the individuals involved. I don't care. I have thick skin. But it hurts the company. People inside the company are really mad at it. Customers wonder.
You have a plan to give Opel a sharpened brand identity, boost share and develop profits? Where are you in that process?
The development cycles in our industry are such that it takes several years to change your portfolio. Fortunately, we have things in the development bag like the Zafira. On the Agila, we made some changes and got it on track quickly and it's a dynamite car.
Some of the niche models we are coming out with, the Speedster, the Astra coupe and the convertible shortly afterward, are things that are not going to necessarily be high volume models, but they will establish something about the brand. That is the purpose of them.
The real changes that are going to occur in terms of the brand profile are going to be the new Corsa, the Astra, the replacement for the Vectra, the replacement or the Omega. Those things are going to roll out in the next several years. They are going to be very specific in that brand profile that I laid out. We are pretty confident from the clinics that we held that they are the right products. We see that in our analysis of lifestyle changes.
What do you see as traditional and lifestyle models?
Probably the three-box sedan. The load-carrier station wagon. The more lifestyle vehicles are the monocabs, the versatile station wagons - they give the monocab-type utility in a much more car-type feeling. Our portfolio in the next five years will be transformed into being nearly 50 percent lifestyle vehicles.
So you expect your lineup to be 50 percent niche vehicles?
No, not necessatily niche vehicles, but lifestyle derivatives, and this is in line with the brand architecture. It's going to take several years to do that.
Unlike Ford of Europe, does Opel have brand recognition?
Yes. Opel does have an image. The brand recognition is very high. The loyalty rate is very high. Where we need improvement is the focus of what it stands for. It is not as clear as it should be and our conquest rate is not good.
We have changed that with the Zafira and I think we will change that with the Agila. The new Corsa will be another improvement. The niche vehicles will sharpen that focus.
Does GM's lack of a real luxury brand affect GM more worldwide than it does Opel? Or does it also affect your image.
Luxury brands used to be designated by their segments and that's not true any more. Let's go away from the industry to make a point. Who what ever thought people would pay that much money to buy Versace jeans? You look at that material and Levis and say. `Why would anybody pay that kind of money?' but they do.
The same is happening in the automobile market. It is creating premium, high-priced vehicles within every segment. Where price differentiation used to be by segment, it is in every segment.
Opel has to be very careful. If you are going to have a solid brand image, you are going to stand for something very clear - and something very clear is affordable technology. Anybody can have good technology at any price. It takes smart engineering to make technology affordable. That is the kind of point that we need to get across.
I am not pushing for high-priced products. That is not where Opel needs to be. That's not what you think of for Opel.
Do you think the new Omega has potential to be on a Fiat platform like the Lancia's? Sales aren't high but the range has been repositioned.
The Omega is in a unique segment. It's a large sedan/wagon not necessarily in the luxury segment. We own that market. Opel should maintain leadership in that segment. I'm not interested in bringing Opel up-market.
Will it make sense in areas where Fiat doesn't have coverage to have Opel dealers sell Fiat models and visa versa?
Opel has big stores. We don't need to dual. In major metropolitan areas we have no problem getting entrepreneurs to invest in exclusive stores. When you get out into the rural areas, the volume is such that entrepreneurs don't want to invest that kind of money and that's why you dual.
I don't see a need with the Opel and Fiat brands to have any dualing strategy at all. It's not necessary. I do not see any advantage in doing it.
General Motors and Fiat are setting up two joint ventures, one for purchasing and the other for powertrains. How will these joint ventures affect Opel? After all, the technical development center in Russelsheim, Germany, develops powerplants for Europe, South America and the United States.
Across Europe, General Motors and Fiat have any number of activities that are involved in powertrain. That is also true in Latin America. The intent is to have a holding company that will be 50-50 owned by GM and Fiat. Since Opel is one of the largest members of the GM family, our investment in powertrains will be considered our equity in the holding company. Out of necessity, we will set up a joint venture in each country - Germany, Hungary, Poland, England, Belgium and Sweden.
On an operational basis, how will you function?
Just like we already do. There will be no difference.
How about future development? Won't that be handled differently?
There will be two centers for development of powertrains: one in Russelsheim and one in Turin (Italy). They will both come up with how they will share that workload.
How will Opel avoid dilution of its development and a recurrence of the problems you encountered when Opel was developing lots of products for General Motors Europe?
The issue was focusing resources to the detriment of the Opel brand. We lost sight of Europe. The powertrain joint venture will help us avoid that.
The facilities that are in Latin America are also companies that will be wholly owned by the holding companies. So there will be a focus on Europe and Latin America. But we will have members on the boards of the companies. Therefore, the customer requirements are going to be loud and clear.
The joint development timing will benefit Opel because some of your key powerplants are old. You would be developing replacements anyway.
We are coming to the point where we would have to make decisions on the next generation on several engines.
Would one decision be who will provide your V-6 engines and common-rail diesel powerplants?
Access to common-rail technology is important to us. On the other hand, Fiat will have access to our all-aluminum L850; that is a benefit for Fiat. As we were looking at it, it was clear there were benefits for both sides in a very complementary fashion.
So Opel's strength is the L850 and what else?
All of our gasoline engines, Family Zero and Family One.
And their strength is diesel?
Yes, that is where we are heading.
Does this joint venture mean that Opel would separate itself more in powertrain development from the United States?
No. And that is going to be a real significant execution in both purchasing and powertrains. In powertrains today, Europe operates fairly autonomously but in concert with North America.
But you did develop one engine, the L850, together?
Yes. They looked at what we had and said let's not develop both of them on both sides of the ocean. The orchestration and the coordination will continue. On purchasing, we have agreed GM's worldwide process will be the major way in which we do our purchasing.
How far off is platform sharing?
We are looking at research-and-development projects. Are we both doing some of the same research? If so, we will drop this, they will drop that and we will share some of each other's technologies.
At the platform area, we are looking at that. Most of what we see in the next four to five years is niche models. Long-term, it's hard to talk about platforms because there are so many variations.
People automatically think that if we have a platform and they have a platform one goes away and the other continues. That is probably not going to happen. There is so much work that needs to be done for both that I don't see a lessening of either one of the engineering centers.
You can e-mail Staff Reporter Diana T. Kurylko at [email protected]