Wednesday, June 16, 2004

The European Question

This article from the Detroit News focuses on what GM should do to solve their European divisions problems, namely, how to stop five straight years of losses. Supposedly, Bob Lutz, the legendary auto exec, is busy integrating GM Europe together, and with GM America.

This coincides with Lutz's decision to de-Swedishize Saab. This has been commented on another blog, Cars! Cars! Cars!.

First of all, Vauxhall and Opel are pretty well integrated; they sell the exact same cars. Saab is the standout, but considering that soon every one of its vehicles will share a platform with a Chevy or Pontiac, that's over too. I don't think integration is really the issue. I think the issue making good cars. Another European car shares an American platform, the Jaguar X-type. It sells poorly. The Saab 9-3 is quite similar to the Chevy Malibu, and it sells well. Why? It's still somewhat Saab-like, in that it's FWD, and looks like a Saab. The X-type is smaller than most Jags, AWD and FWD, a far cry from your normal Jags.

Integration isn't the solution. Building good cars is. One of the fears in Europe is that Japanese and Korean cars are coming into prominence. There's an easy way to combat that: build better cars then them. Or convince your governments to tax the hell out of imports. The latter is not really an option anymore because of greater influence of the EU over individual countries' governments, so the former is the only real choice. European cars are consistently the worst in reliability, and companies like VW and Opel are busy building world class sports cars and luxury cars, something their brands have NEVER done before. In VW's case, the choice to compete with a marque they own, Audi, is pure insanity.

Integration is just an additional expense if it's not done hand in hand with better cars. If they start selling mini-Pontiacs in France, you'll know GM really dropped the ball.

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