Opel turns down long road to exit

OPEL is unlikely to ever return to Australia as a standalone brand after pulling out of the sales race here less than a year into a bold international expansion.

Instead, Opel will work with its Australian sibling, Holden, to re-establish a line of niche lion-badged cars sourced from the German car-maker, sounding the death knell for any likely return of the European badge.

“Coming back as Opel Australia is highly unlikely,” Opel head of corporate communications Michelle Lang told GoAuto today.

“In any event, Opel in Germany have terminated their supply agreement with us, so there will be no Opel brand here for the foreseeable future.” Opel’s 20 Australian dealers are believed to have been told of the brand’s demise at a meeting on Friday afternoon that was booked more than two weeks ago.

However, according to Ms Lang, Opel Australia only found out about Germany’s decision to pull back last week.

“This was a decision from Opel in Germany,” Ms Lang said. “Opel Australia’s business model was based on a set of market conditions which have since moved dramatically.

“There is now a veritable price war in our most important segments, which we cannot viably compete in.

These changing market conditions, and the extent to which they have changed, were not foreseeable at the time the model was prepared,” Ms Lang said. “It is simply not profitable for us to compete.

“Therefore to minimise the financial cost for all stakeholders, Adam Opel in Germany have made the difficult decision to close the current Opel Australia operations, and ... we were made aware of that here in Australia last week,” she said.

“Opel in Australia is a very small scale case, and building a brand in a market of such aggressive price competition quickly became commercially unviable.” GoAuto asked to speak with Opel Australia managing director Bill Mott, but was told that he was busy dealing with the fallout from last week’s shock decision.

“As this is a very recent decision from Germany, who terminated the agreement to supply cars to us last week, Bill is more focused on his team, customers and dealers right now than his own moves,” Ms Lang said.

“He has a lot of work to do as we navigate the closure of 20 dealers, and at such time as he has any announcements to make on his next professional move, I'll let you know.” Opel Australia has refused to disclose how much money it has spent on its reintroduction to the Australian market, or how many of its cars remain unsold in Australia, claiming the information is “commercially privileged”.

It is also unwilling to speak about how its network of dealerships – some with investments in the brand believed to be worth as much as $3 million – would be compensated in the wake of the withdrawal.

“It's too early to comment on this, and it is confidential information,” Ms Lang said.

“We will be speaking with each and every dealer on an individual basis.” She said those talks between individual dealers and Opel Australia would start today.

In the meantime, the car-maker said it had written to all its customers on Friday informing them of the change in circumstances.

“Servicing and warranties will be completely upheld, with the most likely scenario being via Holden's dealer network,” Ms Lang said.

“This is still under discussion, however, given the recency of this announcement.

“However we will absolutely support and honour all commitments we have made to our customers, without question.” According to Ms Lang, Opel's international expansion plans remain in place, with the company’s optimism “underscored by the recent announcement of 350 new engineer hires in Germany”.

“(US parent company) General Motors is committed to making Opel profitable again,” she said.

“There is a plan for a total of 23 new vehicles and 13 new engines by 2016, and a long term-partnership is in place with (French car-maker Peugeot and Citroen parent) PSA.”