Opel to introduce advanced options typically sold on luxury cars to boost sales

Article by Christian Andrei, on June 28, 2011

Advanced features that are typically found on luxury cars will soon be fitted on Opel/Vauxhall’s models as part of a strategy to revitalize a company has had $14.5 billion in losses since 1999.

General Motors Co.'s European unit has been collaborating with management consultants AlixPartners to modify options packages or production plans that would drive up the prices, according to two sources. They’re also working to determine ways that will cut the engineering and manufacturing costs.

The new features include headlights that were tuned to suit high-speed driving on the autobahn. Opel CEO Karl Friedrich Stracke, who predicted an operating profit for 2011, has not been able to increase prices to compensate for the high cost of German labor since its models don’t have the distinction that its rivals’ models have.

For instance, the Opel Astra is priced 15% lower than a comparably equipped Volkswagen Golf. Thomas Stallkamp, principal of U.S. consulting firm Collaborative Management, said that Opel can’t price its cars “like Audi or BMW."

Stallkamp, formerly a Chrysler Corp. president, was a partner at private-equity firm Ripplewood Holdings Inc. when it attempted to purchase Opel in 2009. Stallkamp refers to the GM unit as the “Chrysler of Europe." He explained that the Opel units don’t attract a high number of sales due to the high cost of building Opels and their low prices, particularly in Germany.

There were rumors that GM was thinking about selling Opel but it has denied making these plans. Insiders say that GM executives had talked about a sale but these didn’t get to a serious phase.

They further said that GM didn’t begin a sale process. It also didn’t make any move to involve its banking advisers -- JPMorgan Chase & Co., Morgan Stanley, Evercore Partners Inc. or Commerzbank AG in Germany.

Topics: opel, sales

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