FRANKFURT (Reuters) -- General Motors' Opel/Vauxhall unit will launch a budget minicar in Europe next year to win customers of GM's Chevrolet brand.
GM is focusing its resources on expanding Opel after Chevrolet failed to make headway in Europe. The company will stop selling Chevrolets in Europe at the end of next year.
The five-door minicar will be priced starting at 10,000 euros ($12,926). It will go on sale starting next summer badged as the Opel Karl in mainland Europe and as the Vauxhall Viva in the UK.
The hatchback is based on the next-generation Chevrolet Spark platform and will be built in Korea, according to a source at Opel/Vauxhall. Power will come from Opel’s new three-cylinder, 1.0-liter gasoline engine but the unit will be naturally aspirated instead of turbocharged as it is in the more upscale Adam city car.
The Karl/Viva will replace the Opel/Vauxhall Agila, which a rebadged variant of the Suzuki Wagon R+, built by Suzuki in Hungary.
The car has been designed to be more youthful than the Agila and target the new generation of less staid city cars such as Toyota’s new Aygo. Although it will be an entry model, the Karl will not “feel cheap,” the source said. “We have worked hard to produce a good quality product,” he said.
The name Karl pays homage to one of founder Adam Opel’s sons who helped establish the company in 1862. Karl is a short, snappy and catchy name that represents Opel brand values: German, emotional and approachable,” said Tina Mueller, Opel's chief marketing officer, in the statement. Vauxhall is reviving the Viva name it used from 1963 to 1979.
The Karl/Viva will help Opel win buyers who previously would have considered a Chevrolet. GM positioned Chevrolet as a budget brand in Europe, selling mostly small cars such as the Spark and Aveo built in Korea. Value brands including Renault’s Dacia and Volkswagen’s Skoda have enjoyed robust growth in the austerity-plagued region. By dropping Chevrolet in the region, GM risks losing out to rivals.
In June, Opel CEO Karl-Thomas Neumann said the Germany-based automaker was considering making a car designed to lure clients away from other value brands.
Opel also is expanding its lineup as part of GM’s plans to restore profitability at its European operations by 2016. GM lost $305 million in Europe in the second quarter, up from a $114 million loss a year earlier largely because of costs related to the closure of an assembly plant in Bochum, Germany.
The Karl is likely to debut the Geneva auto show next March.
Nick Gibbs contributed to this report