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Analysis: why GM is pulling Chevrolet out of Europe

Wed, 06 Nov 2013 00:00:00 -0800

The news that Chevrolet is to leave the western European car market (while staying in eastern Europe and Russia) is not a huge surprise, but it provides an interesting contrast to the success of fellow Koreans, Hyundai and Kia. “Fellow Koreans?” you might say, “but isn’t Chevrolet American?” Yes and no.

The Chevrolets we were getting were all made in Korea in the factories that used to be owned by Daewoo, except for the handful of Camaros and Corvettes, which were authentically American. Confused? You weren’t the only one. At a recent motor show, the two American muscle cars dominated the Chevrolet stand and I asked a Chevrolet person if they weren’t simply a distraction from the tough business of selling value family cars. “Oh no, he replied, “they give a halo to the rest of the range.”

Chevrolet to leave Europe

If that was true, it was hard to understand how both Hyundai and sister-brand Kia were outselling Chevrolet by 6:1 in the UK, without having a single V8 anywhere in sight. At some point in the future, business schools will have this as a case study: General Motors has over 80 years experience making and selling cars in Europe, takes over a Korean company that had previously outsold Hyundai, yet ended up being trounced here by a company which has barely a fraction of GM’s European heritage.

There was nothing wrong in principle with the idea of GM having a value brand to compete with the likes of Skoda. However, there was little evidence of either value or brand with Chevrolet, The main issue was the product. Hyundai (and Kia possibly even more so) had a determination to understand and conquer Europe that bordered on the terrifying – from the Accent to the i30 in one jump was an amazing achievement. Chevrolet had all the hallmarks of fat, lumbering pre-bankruptcy General Motors.

The cars were moderate, the value was moderate, everything was moderate, as if the accountants had pared everything back to the minimum acceptable level. But why pay £10,000, or even £15,000, on a car from an unfamiliar manufacturer that had no distinguishing features? It might just have worked if the brand was strong enough. In fact, the name stood for almost nothing in the minds of the British. Everyone knows what a Kia is for (even if they don’t much like it) – good value, surprisingly good design and high quality. But Chevrolet never established any identity with the public.

In the end, Chevrolet’s incessant losses in Europe were a problem that General Motors could do without. With Opel/Vauxhall still heavily loss-making, GM decided that it made more sense to spend all its energy on the big European problem that might be solvable, rather than the small one that almost certainly wasn’t. As Winston Churchill reportedly said of Americans in a different context, “They can be relied on to do the right thing - after all other possibilities have been exhausted.”

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By Jay Nagley, contributor, MSN Cars