Opel CEO Says Troubled Automaker Will Rebuild Image in Germany

Opel/Vauxhall CEO and GM Europe President Nick Reilly says the company plans to act quickly to rebuild its damaged image in Germany, the company’s home market. Reilly says, “We need to rebuild the image in Germany. We will need to do something significant to get the confidence back.”

Initially, Opel plans to win back customers by rolling out a few new incentives like the “loyalty bonus,” which is designed to convince the millions of Opel owners in Germany to consider buying the brand again when it’s time for a new vehicle purchase. Reilly says this and other plans will be rolled out quickly.

The situation now is that one out of every eight cars on German roads is an Opel, but of the new cars being sold now, only one in 13 is an Opel. The automaker sees this gap as its opportunity to gain sales.

Opel spokesman Stefan Weinmann said, “We clearly have the potential to regain many of our past customers, and we are fine-tuning dedicated commercial actions.”

In a plan that is not unlike the scrappage programs of late, the automaker would offer current Opel owners a 2,500 euro ($3,092) incentive to trade in their used Opels for new ones. The company isn’t sharing details of the program, but a source familiar with it said that the supervisory board of Opel discussed plans last week. The source also mentioned that the plan “will be costly and will take time to show significant results.”

Reilly said he believes that it may take as long as four or five years to return the company to where it once was. In an interview with Sueddeutsche Zeitung, he said, “Image can be destroyed quickly, but it takes a long time to rebuild.”

There has been a disproportionately large drop in sales in Germany compared to the rest of Europe. Even though Opel’s new Astra compact is now in showrooms, five month sales in Germany were down 41%. Reilly says this is in part due to the end of the German scrappage program. Opel was also damaged by an unsuccessful attempt to secure 1 billion euros in German state aid, and it has announced that the majority of the 8,300 jobs that will be cut are in its home market.

The president Opel’s European dealership association, Jaap Timmer, says that he believes Opel’s image can be rebuilt. “Opel’s customers were initially confused but now are beginning to appreciate the fact that GM will restructure the company without German taxpayer money.”

According to the trade publication Autohaus PulsSchlag, Opel is now offering the deepest discounts of any automaker in Germany. Opel dealers averaged 12.8% in discounts off of list price, overtaking the 12.4% offered by Fiat, which is usually the leader in incentive programs in Germany.

A spokesman from Opel said that the survey of dealers is not a true representation of Opel’s sales activities. He feels the company is acting more conservatively than that, and said, “You’ve got to be careful in a market that’s not really there. We are not scaling back, but we’re not being really aggressive either. In a year following the end of scrappage schemes, offering incentives is like putting money in the waste basket.”

In addition to repairing its image, Opel will be making deep cuts in European production as part of a five-year, 11 billion euro restructuring plan. Capacity will be reduced by 20%, and 8,300 jobs in Europe will be cut. Some analysts wonder if these reductions are enough.

One Frankfurt-based analyst whose name was withheld due to company policy commented, “Opel/Vauxhall’s main problem in Germany is the same problem it has Europewide: overcapacity. It’s an issue it has not solved yet.”

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