Eleven months ago the GM’s German brand Opel entered the Australian market with pomp and colour, promising to sell more than 15,000 cars by 2015. This has however proved a daunting task. Its 3 models portfolio has failed to report significant sales in the competitive Australian market due to what experts call “half-baked” market entry strategy. It has left its 20 dealers in utter shock on what to do with the Opel brands they had in their showrooms. Its 3 models; Corsa, Astra, and Insignia OPC has reported a paltry sales of approximately 1530 units since it entered the market in August 2012. But what has caused a giant automobile company operating in multiple regions to fail so miserably? Perhaps a more detailed look into the market entry strategy will provide a few pointers.
Over Capacity in European Factories
Around the globe, the automobile demand is on the decline. It has been made more so due to the struggling European economies. Most car manufacturing companies have adopted a fair pricing strategy in order to increase or maintain their customers. Opel factories in Germany have overcapacity in terms of manpower and equipment. In order to remain profitable, they price their models relatively higher than their competitors such as Hyundai. The matter is much more complicated by the hostile industrial relations in Europe. Offloading excess labor will trigger strikes in an already difficult work environment. This has negatively affected the Opel brands ability to compete with other brands in the market. If you throw in the “newness” in the market spanner into the mess, you get a brand that can barely breakeven, leave alone make a profit.
Opel has fashioned its cars as a classier alternative to Volkswagens, Nissan, Hyundai, Ford and Holden. Unfortunately, even rich buyers are cautious nowadays. The market has adopted a “bare necessity” approach to any capital expenditure. A buyer will be happy with a fairly priced Nissan that can get him around. This push has been brought about by the economic woes in Europe, which have a direct effect on the Australian economy. The high exchange rate between the Australian Dollar and the US Dollar has also directly affected any imports pricing.
Friction between Opel and Holden
The ultimate looser when two sister companies fight over the market share is the new brand. This is exactly what has happened to Opel brands. Chevrolet was more experienced in the Australian market. It seems that Opel’s overtures to the potential buyers were sabotaged by its sister company by lowering the price of its car models. Any serious marketer will tell you that a marketing strategy in Europe will not work in Australia. The car market regulations in Australia allow much more competition as compared to its European counterparts. The fact that Australia is near Opel competitors factories such as Hyundai, Nissan and Toyota has evened out the playing field. It is rather unfortunate that car dealers like www.carzoos.com.au will not even be afforded the chance to choose an Opel in their yards. It would have been a lucrative deal for this second hand market segment.