General Motors Company’s Opel division has seen a 40% decline in sale this year as consumers remain uncertain about the brand’s viability. To boost sales of both its Opel and Vauxhall brands, GM has announced that it will give buyers what it calls “lifetime warranties.”
Although technically not a true “lifetime” offer, the warranty will cover the vehicles’ engines, transmissions, cooling systems and electronics for up to 160,000 kilometers (99,200 miles) and GM is not imposing a time limit. Opel and Vauxhall will provide complete coverage on all materials for up to 50,000 kilometers. Coverage amounts will decrease as the mileage increases up to 100 kilometers at which point the automaker will provide 40% coverage, leaving the owner to cover the remaining 60% of material costs.
Last year’s launch of a new version of its popular Astra compact car failed to boost sales and instill consumer confidence to the extent Opel had hoped. Combined European sales for GM’s Opel and Vauxhall brands fell 4.5% during the first half of the year to 536,258 units. According to the European automakers association the total market saw an increase of slightly over one half of one percent during the period.
European consumers remain skeptical of Opel and Vauxhall in the wake of last year’s aborted sale of the brands followed by GM’s attempt to secure government financing of the brands’ $4.3 billion restructuring. Earlier this summer, GM withdrew its request for government assistance and announced that it would fund the efforts itself. Opel hopes to complete its restructuring by the end of this year.
GM put Opel and Vauxhall on the auction block after emerging from its U.S. government-backed bankruptcy restructuring last summer. Canadian auto parts maker Magna International, Incorporated along with its financing partner, Sberbank of Russia, appeared on the verge of acquiring Opel until GM abruptly decided to retain ownership of the money-losing brands in November.
In late June, Opel CEO Nick Reilly predicted that Opel will return to profitability as early as next year. He also conceded that getting there will be no small task. In addition to Opel’s tattered image, industry-wide auto sales in the European market have stalled as a number of government scrapping programs expired. He also said that rebuilding Opel’s image in its home market of Germany will be especially problematic. Reilly said, “We have lost some market share in Germany. This could partly be explained by the end of the scrapping scheme in September which had benefited Opel, but I would say this is an excuse. Yes, we do need to recover the image in Germany.”
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