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July 20, 2014 3:54 pm
General Motors plans to enter Europe’s entry-level car market with a line of low-cost models as it looks to claw back market share lost to budget rivals.
GM, which is fighting to return to profitability in Europe, covets the entry-level segment carved out by budget brand Dacia, which has leveraged strong appetite from Europeans hit by economic austerity to become the continent’s fastest-growing carmaker.
“Dacia is a great thing. [GM] is definitely not Dacia, but this whole budget and entry-level market segment is very interesting. They can be admired,” said Karl-Thomas Neumann, chief executive of Opel, GM’s European business. “We are definitely looking at the segment.”
GM is planning on using the new low-cost line to replace the gap left by the costly decision to withdraw its Chevrolet marque from Europe last year.
“We had Chevrolet, which looked like a budget brand, but it was not,” Mr Neumann told the Financial Times in an interview. “We think there is some possibility for Opel to come up with some entry-level product, specifically now Chevrolet is out of the market.”
Dacia, a Romanian manufacturer owned by Renault, has become the French carmaker’s most valuable asset in Europe. Like other low-cost carmakers, its no-frills approach chimed with customers feeling the pinch from high unemployment, sluggish economic growth and severe spending cuts by governments.
Sales of its £6,000 hatchbacks and £9,500 SUVs, which offer minimal customisation and add-ons to keep costs down, have risen 61 per cent over the past two years, against a total European market that has fallen.
GM is eyeing a small SUV and a compact car smaller than the Opel Astra at similar price points to Dacia as part of the move towards the entry-level segment, Mr Neumann said.
But he stressed that turning round Opel, which GM came within days of selling off in 2009, was the US manufacturer’s first priority.
Opel’s mass-market rivals, such as Fiat, PSA Peugeot Citroën and Ford, have all suffered over the past six years in Europe, as customers either switched to cheaper options from Dacia or South Korean brands like Hyundai and Kia, or were tempted by smaller, cheaper models from premium manufacturers Mercedes-Benz, BMW and Audi.
In 2008, GM brands had a 10.4 per cent share of the European car market, while Dacia, Hyundai and Kia combined held 4.9 per cent. Today, the three lower-cost brands account for 9.1 per cent, to GM’s 7.9 per cent.
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