GM pulls Chevrolet out of mainstream markets in Europe
5 December 2013
Beginning in 2016, GM will compete in Europe’s volume markets only under its Opel and Vauxhall brands. The Chevrolet brand will no longer have a mainstream presence in Western and Eastern Europe, largely due to a challenging business model and the difficult economic situation in Europe, the company said.
Chevrolet, the fourth-largest global automotive brand, will instead tailor its presence to offering select iconic vehicles—such as the Corvette—in Western and Eastern Europe, and will continue to have a broad presence in Russia and the Commonwealth of Independent States.
This is intended to improve the Opel and Vauxhall brands and reduce the market complexity associated with having Opel and Chevrolet in Western and Eastern Europe. In Russia and the CIS, the brands are clearly defined and distinguished and, as a result, are more competitive within their respective segments, GM said.
Cadillac, which is finalizing plans for expanding in the European market, will enhance and expand its distribution network over the next three years as it prepares for numerous product introductions.
Europe is a key region for GM that will benefit from a stronger Opel and Vauxhall and further emphasis on Cadillac. For Chevrolet, it will allow us to focus our investments where the opportunity for growth is greatest.—GM Chairman and CEO Dan Akerson
Chevrolet will work closely with its dealer network in Western and Eastern Europe to define future steps while ensuring it can honor obligations to existing customers in the coming years.
The majority of the Chevrolet portfolio sold in Western and Eastern Europe is produced in South Korea. As a result, GM will increase its focus on driving profitability, managing costs and maximizing sales opportunities in its Korean operations as the company looks for new ways to improve business results.
With the decision that Chevrolet will no longer have a mainstream presence in Western and Eastern Europe, GM expects to record net special charges of $700 million to $1 billion primarily in the fourth quarter of 2013 and continuing through the first half of 2014.
The special charges include asset impairments, dealer restructuring, sales incentives and severance-related costs, and will pave the way for continued improvement in GM’s European operations through the further strengthening of the Opel and Vauxhall brands. Approximately $300 million of the net special charges will be non-cash expenses. In addition, GM expects to incur restructuring costs related to these actions that will not be treated as special charges, but will impact GM International Operations earnings in 2014.
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