Vauxhall claims it will overtake Ford 'within three years'

By Rob Golding
|
4 March 2013

While the biggest UK car makers are trying to produce more prestigious cars to elevate their brands the biggest UK car traders are dumping holdings in volume cars.

The pioneers of the two trends are Vauxhall, which has just shown Cascada, a premium four-seater convertible, and Inchcape which has just sold all its Ford holdings – a move that it described as its “final disposal of non-premium.”

So sure is Vauxhall that its principal rival has got it wrong that it is openly saying that it will overtake Ford and become UK market leader “within three years.”

The two have very different ideas when it comes to manufacturing strategy though. While Ford has stripped down and cleaned up the complexity of its business around the world, GM is pursuing partnerships in component purchase with Peugeot Citroen. The new joint venture company started business last week.

“It’s win-win for both of us,” says Steve Girsky (pictured), who is GM’s top man in Europe and chairman of the board at Opel. The next step, he says, will be joint development of platforms and basic body structures.

Girsky is an ex-Morgan Stanley banker.

The foundations of his strategy are built on the certainty that if you make only volume cars you die. “Only premium cars can make money.”

“The young man of today does not give a fig for the car or its badge. What he will demand is content - wi-fi and a library of audio books.”

These are the buyers that Girsky says they have to satisfy; and they have to be satisfied within two or three years or there will not be the profitability from sales that the business needs to invest and survive.

The new Cascada is built in Poland in new facilities and is branded both Vauxhall and Opel. Those two brands have to me “moved upwards” to ensure that “there is room for Chevrolet underneath.” And he is committed to “mending Opel”.

“Opel used to be good. We need to recover what it used to achieve in Germany.”

He clearly has misgivings about three brands and a strategy devised well before his time: “Ford lost the same money as we did and they have got a much simpler strategy with just one brand.”

The suggestion is that the spotlight is on Chevrolet, a very recent brand name in Europe and lacking historic loyalty.

A surprising virtue of the newly opened Polish plant is that it is already so sophisticated and efficient. Not only is it as good as and in many cases better than Western Europe, but it has also become a centre of excellence in managing innovation.

The Cascada for example needed pop-up roll bars to comply with legislation for open cars in rollover accidents. It was all designed in-house.

And this is no jobbing shop built to use cheap labour and building down to a cost.

One line manager told us that the materials he was using in Poland were better than those used by BMW.

“Germany will be our most important market and we have designed our cars to compete head on with Golf.”

> Vauxhall v Ford: a brand comparison looking at market share, registrations, sales per outlet and dealers' valuation of each. (Source: AMi, SMMT and NFDA)

Author: Rob Golding

Director

automan@futurepoint.co.uk

Comments (14)

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Comments

Bob Watts - 04/03/2013 12:08

Vauxhall Opel are mainstream brands along with Renault, Peogeot, Citroen and Ford. It looks like GM has got another dreamer thinking that Vauxhal Opel will become Premium. Watch out VW & Toyota, GM is dreaming again andcoming to get you!!!
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iceage - 04/03/2013 16:38

Seems like Viagra is back in the GM executive diet. Once entwined with the Frenchies they will be lucky to survive.......
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Karl Davis - 04/03/2013 17:09

Steve Girsky demonstrates the confidence and strong leadership required to make a good brand a really great one. GM whilst far from perfect, are way ahead of Ford in respect of getting their house in order. The Adam product is truly world class, Cascada a real looker and the VXR badged models a credible alternative to the run of the mill "hot" hatches. No surprise then that Vauxhall was the fastesst growing retail car brand in the UK last year. With the ghost of Vectra now laid to rest - GM in europe is the one to watch! Karl Davis, MD, www.coachworks-consulting.com
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sgcb - 04/03/2013 17:14

I think it will take a decade to become a premium brand and profitable.the question is will Detroit have the patience?
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Big Joe - 04/03/2013 17:36

Karl Davis will not say anything bad about GM, Coach Works income comes from Vauxhall, but I do agree, GM is the one to watch! Watch out for the plant closures!! Now we got an ex Banker as head of GM Europe, when did a banker do a good job before?? Why are in a financial crisis? What did happened to Morgan Stanley? Are still around?
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Malcolm David - 04/03/2013 17:39

Vauxhall won't neccesarily become "premium", but the brand has to rise. Volkswagen is now a premium product, but it wasn't always that way. I'd argue whether Toyota is a premium product though . . . Renault now have Dacia, Nissan in America have Datsun as the budget brand, Volkswagen have markedly raised the perception of Skoda and SEAT, with Skoda being a quality brand and SEAT the sporty one so it is possible. If you compare the Mondeo of today with the Mondeo of 2002 it is no longer "just a reps car" and the Focus is a classy product. The right car/colour/specification and options will sell, and better than that be in demand. We want electric everything, compatiability with all technologies, decent platics and trim, and outstanding levels of service. Once the budget is resolved with platform sharing then it all comes down to the people, as despite the technology we still deal with people. Vauxhall now has some serious products and in terms of some of their franchise partners they are on the ball. Others less so but that can;t last forever. for the budget customers there is lots of choice and Chevy have a tough marketplace but Ifr they succeed it will push Vauxhall higher, and I for one would like to see the Griffin rise! . . . . and just for reference I'd argue Renault, Citroen and Peugeot are not mainstream brands, except in their home market where the customers are more patriotic and prefer the gallic style . . .
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Nick Broomhall - 04/03/2013 18:56

"The young man of today does not give a fig for the car or its badge". Good luck with that philosophy....
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c u jimmy - 04/03/2013 21:20

How long before we see pre-reg cascada on the forecourts?
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Karl Davis - 05/03/2013 08:07

You make some very interesting points Malcolm, which are given additional credibility by having identified yourself as being the author. Whilst “big joe” and others wish to diguise their real thoughts, like you, I’ve always been happy to be judged by what I not only say, but also whay I do. Yes Vauxhall UK, and for that matter Opel Ireland are clients of Coachworks Consulting, but so are a handfull of other car manufacturers and around fifty retailers and groups. At Coachworks, one of the main reasons we accellerate business performance is because we are not afraid to say what needs to be heard, even if it makes us unpopular in the process. The first rule of being a Management Consultant is to be authentic – 100% honest about your observations. My opinions about Steve Girsky are just that – my observations. Time may prove me wrong, but after 30 years in the industry, retailing, working for manufacturers and for the past 11 years as acting as a consultant – having the courage to say what you really feel seems to have served me well. General Motors appear to be adopting a very forthright approach to their challenges, including matching capacity to demand, and delivering some premium quality new product. Since forming Coachworks in 2002 however, many senior industry professionals have spoken up in support of Coachworks and the results that our advice and coaching has generated. For complete transparency, some of these most recent clients can be heard at www.coachworks-consulting.com Visit the “Client Results” page and hear - real people, with real names, running real businesses! Karl Davis, Managing Director
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Malcolm David - 05/03/2013 08:38

Having spent the last two weeks with my son in law browsing the net and visiting dealers looking for a late model estate with "all the toys" and a decent image I would have to say the comment about the young man of today not giving a fig about the badge is rubbish. He wouldn't touch the 2011 SEAT Exeo but loved the 7 year old Audi A4 at the same money, wouldn't consider a Mondeo because "it's just a Mondeo", deemed the Avensis to be an old mans car, hated the styling on Citroen, Peugeot and Renault, really rated the Passat but thought it was for someone settled in their 30's, and wouldn't have a Skoda. So wat did this 24 year old who has a dog and expecting their first child buy?? A 59 Plate Insignia Elite Nav with 50k on the clock, the dealer experience was shocking, the car was on the forecourt unprepared, they tried to argue about only one key "as thats how it came to us" and wouldn't budge an inch on price. The used car office was anything but professional and smart . . . we bought the car as he was time limited and it was one of only two online for sale . . the warranty it came with is not worth the paper its wrote on (3 months - maximum claim value £500) and they wouldn't sell us a Vauxhall extended warranty (which we wanted) as they only sell their own extended warranty . . these are the things the brand need to sort out for them to rise. If Vauxhall can ensure that their network partners offer a professional brand image, look after and retain their customers then the rest will follow.
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Geoff Young - 05/03/2013 11:28

Only a banker could come out with a comment like that: "The young man of today does not give a fig for the car or its badge."
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Steve Wallace - 05/03/2013 15:21

Unless Vauxhall Dealers start to make money, the levels of service that Malcolm refers to are unlikely to improve. At least 5 significant Vauxhall Groups went into administration in the last 6 months, and more are in intensive care. Good luck to Opel and Vauxhall, but if the top man really believes that "The young man of today does not give a fig for the car or its badge", let's hope he gets a lesson in brand-building sooner rather than later.
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Karl Davis - 06/03/2013 11:18

Interesting points from Steve Wallace about retailers needing to make more money and the consequences of not doing so, to which I largely agree. Whilst pressure from manufacturers to invest in their brand can force down retailer profitability in the short to medium term (Audi in the UK is a good example of a rapidly declining R.O.S), often the potential to return more from the opportunities that already exist is huge. As a business improvement consultancy, we are continuously undertaking retailer Growth Appraisal’s that uncover a tremendous amount of untapped potential in both car sales and aftersales, and almost always little or no increase in resource is required to achieve this incremental revenue. ** Edited. The comment function is not to be used for overt product or business advertising** The way that we deploy the resource at our dispossal is key and not only to retailer profitability, but also to the customer experience and their feelings about the “brand”. The route to this is effective leadership, which is easier to say than deliver I agree, but the polarity of performance within retail networks of the same brand, however, relates as much to the way resource is utlised as the scale of the operation. Whilst the big retail groups are getting bigger, survival for those smaller operators centres around making the most of every single opportunity, and failure to do this leads the industry to it’s current position. There is a growing number of “Zombie” retailers barely managing to pay the interest on their loans which are being propped up by low interest rates and weak balance sheets of lenders, who in other times would have called in the loans much sooner. The inability of retailers to generate sufficient revenue and cash to pay down loans, maintian resources, and make further investment – let alone return shareholder dividends is very worrying. ** Edited. The comment function is not to be used for overt product or business advertising** Karl Davis, MD, Coachworks Consulting Ltd
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sgcb - 07/03/2013 08:31

Karl stop advertising yourself and your business its so boring
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