General Motors announced today that it will stop selling the Chevrolet brand in Europe by 2016. Instead, GM will focus on its twinned Opel and Vauxhall brands in the European market.
GM says the decision to cancel the Chevrolet brand in Europe was made, “largely due to a challenging business model and the difficult economic situation in Europe.” In the third quarter of 2013, GM lost $200 million in Europe, despite having sold 372,000 cars there during that period. In the second quarter, GM Europe lost $110 million. In addition to the fact that economic problems have slowed car sales in Europe, GM has struggled to earn profits there because several Chevrolet models sold in Europe are produced outside Europe, adding export and shipping costs.
“This is a win for all four brands [Chevrolet, Opel, Vauxhall, Cadillac]. It’s especially positive for car buyers throughout Europe, who will be able to purchase vehicles from well-defined, vibrant GM brands,” GM CEO Dan Akerson said in a statement. “For Chevrolet, it will allow us to focus our investments where the opportunity for growth is greatest.”
GM Europe currently sells a handful of Chevrolet models: The Spark, Aveo (related to the Chevrolet Sonic), Cruze, Camaro, Corvette, Malibu, Trax (related to the Buick Encore), and Volt. Even after 2016, the company will still sell certain halo models under the Chevrolet brand, most notably the Corvette.
GM also plans to expand the Cadillac brand in Europe, enlarging its dealer network as the brand, “prepares for numerous product introductions.” In addition, GM will continue selling the Chevrolet brand in Russia and the several nearby countries, where the automaker says Chevrolet models are sufficiently distinguished from Opels.
Earlier this year, Reuters reported that GM global brand chief Alan Batey planned to turn Chevrolet into a value brand in Europe, and make Opel an upscale brand there, a plan that clearly didn’t come to fruition.
GM promises that it will continue to support Chevrolet customers in Europe by honoring their warranties and providing spare parts for all new vehicles purchased between now and 2015. The company says the announcement will impact its fourth-quarter results, owing to the cost of “dealer restructuring” and severance costs, but says that overall removing Chevrolet from Europe will, “pave the way for continued improvement in GM’s European operations.”