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Market Insight: Car buyers steer clear of Opel

Gone: Sales of the Opel Astra didn't fire as expected in Australia's culture of cut-price deals.

Astra loyalty, German engineering fail to cut through in Australia as Opel pulls out

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Market Insight logo5 Aug 2013

OPEL was banking on the Australian public’s strong connection with the Astra small car and the brand’s German engineering heritage to help it establish a foothold in Australia and take the fight up to mainstream European brands such as Volkswagen.

But it clearly overestimated the extent to which its three core models – Astra, the Corsa light car and Insignia mid-sizer – would cut through to Australian car consumers and had no patience to stick around for more than 12 months to achieve its ambitious target of more than 15,000 sales within three years.

With the European market in dire straits, Australia was seen as a key market in which to keep the production lines rolling as General Motors worked on a turnaround strategy for its struggling Opel/Vauxhall subsidiary.

But for all the investment made in building the brand here – in dealerships, heavy advertising campaigns, and the promise of “volume-selling” new models such as the Mokka SUV to come – the monthly sales figures were so low as to be clearly unsustainable.

In total, Opel sales since its return here – from September last year to the end of July, figures for which were released today – have amounted to 1641 units, or just under 150 a month.

As anticipated, most of these were for Astra, which when sold here as a Holden racked up tens of thousands of sales over many years – including almost 35,000 in 2005 alone – although even then it was by no means a profitable model and disappeared before the decade was out.

This time around, Astra and the “huge residual awareness” Opel was banking on with the model has translated to just 1123 sales over the past 11 months, ranging from a low of 69 units in October last year to a peak of 156 four months later in February.

Last month, only 81 Astras left new-vehicle showrooms across Australia, while Volkswagen, which is dealing with its own problems in the wake of safety concerns over its vehicles, delivered 1225 examples of the Golf.

Any goodwill associated with the Corsa, meanwhile, which in years past was sold here as a Holden Barina, has not been sufficient to generate many sales in the marketplace, with only 192 new registrations of the light-sized hatch recorded over the past 11 months.

Just 13 were sold in July, three more than its worst month last December but below its paltry average of just 17 units a month since the brand’s relaunch. Corsa’s best month came in its opening stanza last September, when a mere 30 cars were registered.

Sales of VW’s Polo were down more than 40 per cent last month, but the 334-unit result was still 25 times greater than Opel managed with Corsa.

As Volkswagen also contemplates a 75 per cent sales downturn of its Passat (143) in July, Opel Australia is now looking to sell remaining stocks of the Insignia, which has barely registered in the medium-car segment.

Opel has found only 326 Insignia buyers since its arrival, marking a monthly average of less than 30. It sold 17 last month, three units up from its worst-ever month (January) and 46 shy of its best (February).

Even before the first Opel dealers opened in Australia, local management was describing the 15,000 sales targeted by General Motors management two years ago as “very aggressive” and longer term than the three years initially proposed.

When discussing Opel’s prospects in Australia, GM executives subsequently pointed to the 5000 sales the brand achieved in another new market – Israel – in its first eight months of operation in 2011.

In its first eight months in Australia, Opel had sold 1155 cars.

The great expectations riding on the brand must have boiled dry by then, and now three months later – with a score of less than 1700 on the board – the company has called it quits.

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