Capacity Needed for Chevy Growth in Europe

General Motors Corp. will build Chevrolets in Central or Eastern Europe to handle continued growth of the brand, top executives tell Ward's.

“We need more capacity for Chevy in Europe,” says Carl-Peter Forster, president-General Motors Europe.

Chevrolet is the “forgotten success story,” he says, noting sales have gone from about 80,000 in 2002 (when GM assumed assets of the former Daewoo Motor Co. Ltd., creating GM Daewoo Automotive & Technology Co. and establishing the Chevrolet brand in Europe) to an anticipated 300,000 this year from 240,000 in 2005. That number is forecast to reach 500,000 by the end of the decade.

“We would like to be producing if not all of them, most of them in Europe at that time,” says Eric Stevens, GME vice president-manufacturing.

“Clearly, at some point, we will start to produce Chevrolets in Europe,” Stevens tells Ward's. “It makes no sense with the kinds of volumes we're beginning to generate here, to continue to import them into the region. It makes good sense to produce where we sell.”

Explosive growth and the arrival of new models “gives us the opportunities to look for additional capacity or production in non-traditional areas of Europe,” while attempting to take advantage of lower-cost manufacturing regions, Stevens says.

The brand is doing well in Central and Eastern Europe.

Stevens notes Chevy has been the leading non-domestic brand in Russia for several years, an achievement that “would definitely encourage us to look at additional Eastern Europe capacity.”

Some European workers' unions are concerned about a migration of jobs East, Forster says. But in the case of Chevy, “actually, we are considering moving production capacity from (South) Korea,” he says.

Forster likes what he sees on the horizon for Chevrolet. He says the bowtie brand's smaller cars complement the larger models wearing an Opel badge.

And he notes the 300,000 Chevy sales to date are cars with gasoline engines in a market skewed toward diesels.

Forster is first to admit an auto maker cannot compete seriously in Europe without a credible diesel engine powering the lineup.

The GM Daewoo-built Captiva cross/utility vehicle will be the first Chevy with a diesel. It goes on sale in Europe this fall.

The second entry will be the Epica diesel midsize sedan, slated to launch in spring 2007, with the auto maker's new 150-hp 2L common-rail diesel.