Neumann’s Epiphany: Opel’s Biggest Problem Is Opel

Neumann - Picture courtesy ctvnews.ca

Karl-Thomas Neumann, since March chief of GM’s tattered Opel division, has met the enemy, and it is Opel. “Our biggest problem-area is the brand,” Neumann told Germany’s Handelsblatt. “It’s a shame that the brand is getting in the way of our excellent products,” Neumann continued. But despair not, Neumann has a solution.

“All we have to do,” Neumann said, “is wipe the dust off the Opel brand, we need to make the brand younger, more modern, more attractive.” If it’s that easy, why hasn’t it been thought of before?

Opel CEOs Since 1948
Name From To
Edward W. Zdunek 11/1/1948 2/28/1961
Nelson J. Stork 3/1/1961 3/1/1966
L. Ralph Mason 3/1/1966 9/30/1970
Alexander A. Cunningham 10/1/1970 1/31/1974
John P. Mc Cormack 2/1/1974 2/29/1976
James F. Waters Jr. 3/1/1976 8/31/1980
Robert C. Stempel 9/1/1980 2/5/1982
Ferdinand Beickler 2/5/1982 1/31/1986
Dr. Horst W. Herke 2/1/1986 3/31/1989
Louis R. Hughes 4/1/1989 7/3/1992
David J. Herman 7/4/1992 6/18/1998
Cary Cowger 6/19/1998 10/31/1998
Robert W. Hendry 11/1/1998 3/31/2001
Carl-Peter Forster 4/1/2001 3/31/2004
Hans H. Demant 4/1/2004 1/15/2009
David N. (Nick) Reilly 1/15/2009 4/8/2011
Karl-Friedrich Stracke 4/11/2011 7/12/2012
Steve Girsky 7/12/2012 7/17/2012
Thomas Sedran 7/17/2012 3/1/2013
Karl-Thomas Neumann 3/1/2013 ???

Actually, it was. The first thing a new Opel CEO usually wants to change is the brand. It’s quite obvious that the Opel brand is in dire need of help, and that fact usually isn’t lost on the new leader.

Changing a car brand for the better is a grueling exercise. It takes iron discipline, a lot of time, and even more money, all things Opel does not have. Audi is often cited as an example of successful re-branding. Indeed, 40 years ago, Audi’s image was worse than that of Opel. What is often forgotten is that it took Audi some twenty years to get meaningful traction in its revirement, and that the big successes were achieved within the last decade. GM does not have 40 years to turn Opel around. Neumann wants to make Opel profitable by 2016, but only charlatans will promise meaningful change of the brand image in that short a time

With the brand on top of the agenda of each new CEO, the direction of Opel’s branding usually changes with the CEO, and only the weather changes more often than CEOs at Opel.

Average Shelf Life Of The Common Opel CEO
Since … Years
1948 3.4
1970 2.7
2001 2.0
2009 1.0

In postwar Opel, CEOs did last an average of three and a half years. Their shelf life deteriorated markedly in recent times. Since the change of the millennium, an Opel CEO kept his job an average of two years. In recent years, Opel received a new boss about once a year on the average.

In 2010, Nick Riley, Opel’s CEO at the time, wanted to move Opel upmarket. Reilly’s successor, Karl-Friedrich Stracke, said Opel moved the brand up market too fast and lost some of its more cost-conscious customers. Short term interim-chief Steve Girsky wanted to go up again: “Think of a Volkswagen-Skoda kind of thing. Opel will be higher-priced, more features and Chevy will be lower-priced,” he told Reuters. The problem of Opel is noty branding. The problem of Opel is to many CEOs who want a different branding than their hapless predecessor.

Neumann wants to position Opel as “German, approachable, and exciting.” Very few will doubt that Opel is German, or that it is approachable. Exciting is the hard part, and it will be so for a while – or until the next CEO.

To polish the brand, Opel hired Henkel’s Marketing Manager Tina Müller, who successfully turned the aging haircare line Schwarzkopf around. But cars are no shampoo, and Opel does not have the time to wait until Frau Müller has gotten used to the idiosyncrasies of the auto business.

CEO Neumann himself is only a peripheral car expert. He is an electronics engineer. At Volkswagen, he was in charge of their electronics development. After his switch to Continental, he bought the car electronic arms of Siemens-VDO and Motorola, while shifting Continental’s weight to that part of the business. Back at Volkswagen, he was in charge of EVs, not a growth market in Wolfsburg. After less than a year on the job, he was sent to China to head Volkswagen’s business there. He lasted only one and a half years.

In the interview, Neumann promised what any European car CEO promises: To end the “rebate culture.” Amongst automakers, this vow is as common and as badly kept as chastity before marriage. Opel is ultra-approachable, its cars have some of the biggest discounts in Germany. 39 percent of all Opels sold in Germany in the first half of 2013 were “bought” by the car dealer or manufacturer, usually registered for a day, and then sold “used,” or moved across a European border at huge discounts.

All European OEMs suffer from a declining EU market, with no turn-around in sight anytime soon. Opel’s German peers compensate this by successfully operating in overseas markets. Overseas was for all intents and purposes closed to Opel. Neumann – apparently after having received religion in Detroit – does not want to change this. “It would cost too much time and money to position Opel as a global brand,” Neumann said.

Being focused on a basket case Europe with a brand that has long lost what little luster it once had is not a recipe for success.