Breaking news: Opel Australia to close operations

UPDATED 16:10 OPEL is closing the doors on its loss-making Australian operations just twelve months after opening for business.

In a statement released this afternoon, the company said it would cease all Australian operations and wind down its network of 20 dealers effective immediately.

The company says price cuts on many of its European rivals, coupled with the expense of establishing a new brand in the competitive Australian market, meant its continued existence was no longer financially viable.

“In order to be competitive, Opel Australia would need to follow recent competitor price reductions, and significantly reposition the price of its core volume models,” it said.

“These changes, combined with the continued investment required to ensure brand awareness, result in a business which is not financially viable for any of the parties involved.” In 2011, then-GM Europe CEO (and Opel chief) Karl-Friedrich Stracke projected the company would achieve 15,000 Australian sales by 2015 – at the time more than the combined total sales of Renault, Peugeot, Citroen, Skoda and Fiat here.

However, the company has sold just 1530 cars since its inception on August 1 last year, including 541 in 2012 and 989 for the first six months of 2013.

Australia already has has the most competitive car market in the world, with more than 60 brands fighting over 1.1 million annual sales. An expansion into markets such as Australia was seen as a key plank in Opel’s plan to diversify beyond its European core, which has been savaged by economic woes post-GFC.

Opel globally has lost money for years. In April this year owner General Motors pledged a further 4.2 billion Euros to the company to fund new models, powertrains and testing facilities.

The company says it will look at supplying fellow General Motors subsidiary Holden with niche product sourced from Europe, as its has previously done with models such as the Corsa (re-badged Barina), Vectra and Zafira.

Opel, which sources all its cars from Europe, currently sells the VW Polo-rivalling Corsa light-car (from $16,490 to $18,990), the Golf-rivalling Astra small-car (from $23,990 to $35,990) and Passat-rivalling Insignia (from $38,490 to $48,990).

The company also sold hot OPC versions of all three model lines here, and planned to launch the Zafira people-mover this month, and the Mokka small SUV in September.

The company said it would now work with employees (including its 15 direct staff at its Melbourne headquarters), dealer and suppliers to sort through the specifics.