Opel’s Neumann Optimistic Despite Europe’s Reticence

FRANKFURT – Opel CEO Karl-Thomas Neumann says the European new-car market continues to rebound at a “disappointing” pace because of Russia’s economic woes, but he voices optimism because thousands of vehicles soon must be replaced in the region.

“The European market has grown, but slowly,” Neumann tells WardsAuto at the Frankfurt auto show. “We thought it would grow more. There is always something, and this time it is Russia.”

Light-vehicle sales in Western Europe were up 3.7% through July to 11 million units from 10.6 million last year, according to WardsAuto data.

But in once-promising Russia, deliveries through August were off 34% to 1.05 million, according to the Association of European Businesses, a sales swoon that prompted Opel parent General Motors to cease production in the country and suspend sales there of its Opel and Chevrolet brand vehicles.

“It was the right decision for us to move out of Russia,” Neumann says at the world’s largest car show, a biennial event. “But we are still on a 10-year (sales) low. There’s a lot of room to make up for.”

All-new Opel Astra.

There are pockets of strength, the chief executive notes. The U.K. remains robust and Opel is well-positioned there with its sister brand holding the No.2 spot for GM Europe. Opel also boasts strength in southern and central European countries.

“So the picture is mixed,” Neumann says. “I’m optimistic. I think there will be growth. But if you take Russia into account, it is growing very slowly.”

Neumann likes Opel’s improving position in Europe after launching the Corsa small car earlier this year and joining GM CEO Mary Barra to introduce the slightly larger and fully redesigned Astra compact sedan and hatchback Tuesday morning.

Bullish on Astra

The new Astra is seen as pivotal to helping Opel break even financially sometime next year after more than a decade in the red. The volume-seller boasts segment-leading driving dynamics, GM says, a range of fuel-efficient and fun engine choices, as well as industry-best connectivity and some features normally found in the premium segment.

Opel counting on most Astra customers to opt for well-equipped models.

The Astra does not go up in price, either, Neumann notes. Opel leadership thinks higher average transaction prices will come as buyers check option boxes for the new equipment choices.

The biggest barrier to success for the new Astra, analysts say, are the profit-chopping discounts European buyers expect with C-cars. The Astra also competes again the Volkswagen Golf, the runaway leader in the segment.

“There are lots of discussions about this segment, but the segment is very large, the largest in Europe, and Opel has always played an important role,” he says. “So we cannot give that position up.”

That’s why Opel went all-in on Astra’s redesign, he adds. Opel reports 30,000 orders already have been taken for the car. “We’ve got a car here that made a big step and is able to face up to its competitors and be even better in some aspects.”

The new Astra also comes on the heels of a big investment in polishing up the Opel and Vauxhall brands, which Neumann confesses had become “dusty” in the eyes of car buyers over the years.

“We are in a stronger position now. We want people to be proud to put their (Opel) key on the table,” he says. “Because if you think it is a crappy brand, you can do the best car and (buyers) will never consider it. We put the brand on the move, and here at this show we are presenting a forwardness and self-confidence way different than we could two years ago.”

Looking ahead, Opel also can count on the addition of a pair of small high-margin CUVs from its partnership with French automaker PSA Peugeot Citroen and a large CUV off GM’s Epsilon D-segment platform. Neumann leaves the door open for another CUV down the road.

“We will fill this gap with our crossovers, which are not the traditional SUV but a very modern interpretation. They have a lot of lifestyle and a lot of utility.”

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