PARIS -- Rebadging Daewoo-built vehicles as Chevrolets in western Europe will cost General Motors Europe tens of millions of euros while it struggles to reverse losses.
The immediate costs for the January 1 changeover are:
Discounts to sell leftover Daewoos are said to be as high as E1,500. Financing these incentives could cost GM as much as E37 million.
GM Europe CEO Fritz Henderson said last month that he would be happy if GME operating losses this year were no worse than $100 million.
The rebadged Chevrolets will be built by South Korean automaker GM Daewoo, which is controlled by GM.
The move gives GM a low-cost brand for Europe.
GME President Carl-Peter Forster said, that, while the main Opel brand's market share is stationary at about 10 percent," GME may see its European market share grow with the help of Chevrolet to 11 or 12 percent within five years."
GM has rebadged some Daewoo models as Chevrolets outside western Europe.
"We already had a strong start in central and eastern Europe earlier this year," said GM Chairman Rick Wagoner. "We will now expand in western Europe with products from South Korea."
Henderson said Daewoo has increased its European market share to 0.9 percent from 0.6 percent since last year, "even without a diesel." Globally, GM sold 3.6 million Chevrolet-brand vehicles in 70 countries last year, although most were US-built larger cars and light trucks for the US market.
In Europe, the Chevrolet brand will be positioned as an entry-level affordable car, below mainstream Opel (Vauxhall in the UK) and the expressive premium models of Saab. But there will be some overlap between Chevrolet and Opel.
"But you need to say for each brand: that is our center of gravity," said Jonathan Browning, GME vice president for sales and marketing. "The Astra is the heart of Opel, at Chevrolet there are the Matiz and Kalos, and Saab has the 9-3 and 9-5." He added that in the future, "there may be overlap" in Chevrolet and Opel SUVs.
GME has already started a three-month transitional effort for the brand name switch. It has informed national distributors and dealers, sent letters to Daewoo customers and added capacity at call centers. "Customers want to know about the warranty on their existing Daewoo cars," Browning said.
He did not specify how many Daewoo vehicles remain unsold in western Europe.
Distributor sources said the number is 20,000 to 25,000, including 3,000 in the UK and 2,500 in the Netherlands.
"Financially, we will do what is necessary to sell them before January 1, although during the November-December period the market is usually soft," Browning said.
Dealer sources say that they will offer incentives around 15 percent.
Said one: "We must get rid of them, because we do not want to overlap Daewoo and Chevrolet-branded cars in our showrooms."