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Opel passes Fiat as top discounter in Germany

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Opel passes Fiat as top discounter in Germany

Automotive News Europe -- June 23, 2010 06:01 CET

BERLIN (Bloomberg) -- General Motors Co.'s money-losing Opel unit overtook Fiat S.p.A. as the top discounter in Germany last month as the brand seeks to halt a slide in sales.

Opel dealers' discounts in May averaged 12.8 percent off the list price, undercutting the 12.4 percent savings from Fiat, the traditional incentive leader in Germany, according to trade publication Autohaus PulsSchlag. The industry averaged rebates of 10.9 percent, the researcher said in its monthly survey.

Uncertainty surrounding the brand contributed to a 41 percent sales slide in Germany through May even after rolling out a new version of its best-selling Astra compact.

GM, working toward an initial public offering, decided last week to fund Opel's restructuring itself, after failing to secure 1.8 billion euros ($2.2 billion) in aid from European countries.

“The Opel brand, which was already weakened by quality issues, has suffered considerable damage in the year and a half- long aid pursuit,” said Stefan Bratzel, director of the Center of Automotive Research at the University of Applied Sciences in Bergisch Gladbach, Germany. “The withdrawal of the aid request offers a chance for a new beginning, but it will be a long road.”

The survey, based on responses from dealers, isn't representative of Opel's sales activities, said an Opel spokesman, Ulrich Weber, adding that Opel itself didn't increase incentives or offer special financing conditions like some of its competitors did.

‘Average' discounts

Discounts are running about “average,” GM Europe President Nick Reilly said in an interview on the sidelines of the Automotive News Europe Congress in Bilbao, Spain. After last year's government incentives, heavy discounting is a bad idea, he said.

“You've got to be careful in a market that's not really there,” he said. “We are not scaling back, but we're not being really aggressive either. In a year following the end of scrappage schemes, offering incentives is like putting money in the waste basket.”

The decline in sales last month partly reflects the model changeovers, said Weber, who is based in Ruesselsheim, near Frankfurt. The new Astra's wagon version will arrive in showrooms in the autumn, while the revamped Meriva minivan went on sale earlier this month, he said. The new models should boost Opel's market share in the second half, Reilly said.

The Astra starts in Germany at 15,900 euros, compared with 16,825 euros for the segment-leading Golf from Volkswagen AG and 16,290 euros for rival Fiat's Bravo, according to the manufacturers' websites.

Europe market running at 17.4M

Auto sales in Europe are running at a 17.4 million annual pace, 1 million higher than expected, largely because of surprisingly good sales in Russia, Reilly said.

Opel will be close to break-even this year and should be profitable in 2012, Reilly said. Some restructuring actions may not be completed until next year, he said. The plan includes eliminating 8,300 jobs from a European workforce of 48,000.

During the 18-month wrangling over Opel's future, which included bids from Fiat and RHJ International SA, Opel and its U.K. brand Vauxhall have struggled to retain customers.

GM last November backed out of a German government-brokered agreement to sell the majority of the unit to Canadian parts maker Magna International Inc., deciding to keep the unit instead.

Opel's decline in German deliveries in the first five months exceeded the 28 percent drop for the overall market, according to the country's Federal Motor Vehicle Office.

Opel and Vauxhall's five-month market share in Europe slid to 6.9 percent from 7.6 percent a year earlier, the European Automobile Manufacturers' Association said.

“The only way for Opel/Vauxhall to sell anything is to slash prices,” Simon Empson, managing director of U.K. discount car website Broadspeed.com, said in a telephone interview, adding that Vauxhall is offering discounts of more than 25 percent, including on the new Astra. “They're not selling. There's no interest.”

Read more: http://www.autonews.com/article/20100623/ANE/100629960/1308#ixzz0rgdCoTmL

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