General Motors will pull Opel from China next year after the brand failed to gain traction in the market over the past two decades.
Instead, GM will invest in Europe to boost Opel sales in its home region.
Opel, which has been in China since 1993, never grew beyond a low-volume, niche player in the country, accounting for less than 1 percent of GM's sales in the market last year. The marque will spend 245 million euros (2 billion yuan) to add two models at the main Ruesselsheim factory in the coming years.
GM, which in 2013 was outsold by Volkswagen AG in China for the first time in nine years, has been reorganizing brands to give more focus to its global offerings. The company said in December that it will pull Chevrolet out of Europe, where GM is trying to restore profit at Opel and U.K. sister division Vauxhall, and that its Holden unit will stop producing cars in Australia.
"What GM is doing is to try to make it clearer who's responsible for what," said Erich Hauser, an automotive analyst at International Strategy & Investment Group. "By pulling Opel out of China, you just make it clear that Opel is a European brand, for the European market and with the aim of making money in Europe."
Last year, Opel's 22 Chinese dealers sold 4,365 vehicles. By comparison, Buick's 650 sales locations in the country delivered 810,000 vehicles last year.
'Long overdue decision'
"This is a long overdue decision," Opel chief Karl-Thomas Neumann said in a statement Friday. "It would have cost hundreds of millions of euros to raise awareness of the Opel brand and to expand the distribution network. Buick, however, is one of the market leaders in China and we plan to intensify our future collaboration."
GM sells more vehicles in China than in any other country. The company outlined plans a year ago to invest $11 billion with its joint ventures through 2016 in China on new plants, employees and products.
A sale of Opel to Canadian auto parts supplier Magna International Inc. and Russian partner OAO Sberbank was among options that GM considered as the U.S. company struggled to restore group profitability during the global recession in 2009. GM, which has controlled Opel since 1929, chose instead to keep the business and reorganize it to make it profitable.