What lessons from Chevrolet?

  09 December 2013

Am I the only one to see an irony in Chevrolet pulling out of Europe in the very same week that Saab, now under Chinese ownership, restarts production?

These two GM brands are, for the moment at least, the only two casualties of the pan-European sales slump and yet both face a future in the Far East. At which point, any attempt to draw a similarity between the two failures should probably cease.

The closure of Chevrolet Europe seems to have come as a shock only to those within the company – though we do understand they had a contingency plan in place, which suggests somebody thought it might happen.

As an outside observer, Chevrolet appeared to have lost its purpose long ago. It was a purporting to be a budget brand, yet it wasn’t cheap, and any notion that it could build on its brand strength in the US to grow in Europe was naïve in the extreme (see also: Cadillac, Dodge and Hummer for starters).

It’s also naïve to think that all ‘budget’ brands can make the transition to ‘value’ brand without some seriously good product and market differentiators. Not everybody can ‘do’ a Skoda.

It’s never been fashionable to admit it but Daewoo (where Chevrolet Europe originated) was very successful in its budget guise, achieving a 1.5% market share at its height. And, of course, Dacia has shown what you can do in Europe if you strongly promote a cheap entry point and a budget product.

There are wider issues at stake too. Despite all the talk of plant closures, Europe still has something like 25% overcapacity in car production. False registrations (not just in the UK but in other major markets such as Germany) are a fact of life.

Yes, economies are recovering, but very slowly and it will be a long time before European consumers are ready to buy cars in large numbers again. The question we should be asking is not ‘what went wrong with Chevrolet’ but ‘who’s next’.

Rupert Saunders

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