Chevy's Latest Europe Plan: We Quit


Europeans won't be able to buy models like this Chevy Cruze wagon for much longer. GM says it will stop selling Chevys in Europe after 2015. Photo credit: General Motors Co.

General Motors said on Wednesday that it would halt sales of Chevrolet-brand vehicles in Europe beginning in 2016.

GM's decision comes after ten years spent trying to establish Chevy as a viable auto brand in the European market. But despite a series of marketing pushes and new models, the brand has managed to carve out just a tiny share of Europe's auto market.

The decision will leave Opel (and Opel's U.K. brand, Vauxhall), as GM's standard-bearers in the region. It's probably a good decision.

But given the effort that GM seemed to be putting into Chevy in Europe just recently, it raises a troubling question: Does GM have a well-thought-out strategy for Europe?

Why GM needs to get Europe working
Here's why it matters: General Motors has lost a fortune in Europe in recent years, over $17 billion since 1999. Much of that is due to long-standing troubles with the company's Opel subsidiary.

Opel, a German automaker owned by GM, suffered for years from many of the problems that plagued GM in the United States: Too-rich labor deals, too much infrastructure, models that weren't competitive with the market leaders.

Over the last couple of years, GM CEO Dan Akerson has pushed hard to transform GM Europe into a profitable business. Opel has been completely overhauled, with new management and new models that are fully integrated into GM's global product plan.

The changes have narrowed GM's losses in Europe considerably this year. GM expects to break even in Europe, at least on a pre-tax basis, by the end of 2015.

But those changes came after a series of fits and starts that suggested that GM's leadership didn't have a plan, but rather were just trying everything they could think of until something worked.

Right now, the current course appears to be working well for Opel. But Chevy -- GM's other big brand in Europe -- has been a problem for a while. And as with Opel, the likely solution to that problem came after a protracted period of what now looks like trial and error.

Was Chevy ever a good fit for Europe?
The biggest problem with Chevrolet in Europe has always been that it was in danger of overlapping with Opel.

For a long time, Opel was a quasi-independent operation, and its leadership seemed to see the Chevy brand as a threat imposed by U.S. managers who didn't understand the European market.

In an effort to steer clear of Opel's lineup, Chevy was positioned (for the most part) as a low-cost brand in Europe, relying on Korean-made small cars.

Sales were never great. But in recent years GM CEO Dan Akerson pushed to turn Chevrolet into a unified global mass-market brand, similar to the strategies followed by Toyota and Ford with their namesake brands.

That meant pressure for Chevrolet to become more of a player in Europe. GM tried, with new models and a change of managers.

There were always a few U.S. made "halo" cars, like the Corvette and Camaro, available -- at high cost. But most European Chevys were cheap, and that's how Europeans came to see the brand.

Apparently, GM has now decided that overcoming that reputation isn't worth the effort. For GM shareholders, that's likely a good decision.

But it does make us wonder what GM's leaders were thinking all along.

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Fool contributor John Rosevear owns shares of Ford and General Motors. You can connect with him on Twitter at @jrosevear. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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