GM's Opel returns to Shanghai auto show with limited ambitions

Sat Apr 20, 2013 3:13pm EDT
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By Christiaan Hetzner

FRANKFURT (Reuters) - General Motors' (GM.N: Quote) troubled Opel division is returning to China's main auto show after a five-year absence, with three new cars at the center of a long-promised push into the world's largest market.

In Germany, where Opel employs around 20,000 workers, the move may please unions and politicians anxious to preserve jobs in an election year.

But analysts say it falls far short of earlier hopes for an overseas sales revival for the European brand.

Opel badly needs to expand beyond Europe, where it is losing money at an alarming rate - $1.8 billion last year - as it struggles to cover the fixed costs of factories operating far below capacity. The continent's auto market is at its smallest in nearly 20 years and still shrinking.

But an already unambitious China strategy is likely to be undermined by a tiny dealer body, painful import tariffs and fierce competition from other GM brands.

Opel's new CEO, Karl-Thomas Neumann, appeared to emphasize China's potential soon after taking office in March but the former head of Volkswagen in China has since been conspicuously quiet about his brand's goals in the market. GM has distanced itself even from a modest 30,000-vehicle sales target advanced by Neumann's predecessor last year.

"We do not provide details on volume targets," an Opel spokesman said.

GM's plans to develop Opel in China now amount to little more than "lip service" to the brand's potential, said analyst Michelle Krebs.   Continued...

Opel cars are pictured at the Opel plant of Bochum in March 28, 2012. REUTERS/Ina Fassbender