GM Reports Record European Sales for H1, Driven Again by Chevrolet and Russia

Russia Drives Regional Growth

General Motors (GM) Europe says that it sold more vehicles than ever before in the first six months of 2008. First-half sales totalled a record 1,160,935 passenger cars and light commercial vehicles (LCVs), which is 2.8%, or 31,600 units more than were sold in the corresponding period in 2007. GM calculated that this gave it a 9.5% share of the region's market, which is stable with its year-earlier market share.

Although GM did not give any information away about its performance in the core Western European region, it is clear that substantial gains in Eastern Europe and Russia offset falling volumes in Western Europe. "GM is successfully managing to keep its sales momentum in Europe, thanks to an aggressive strategy for growth in Eastern and Central Europe. Despite the headwinds in some of the major western markets, I'm proud to say that our multi-brand strategy is paying off and thanks to a great teamwork we are quickly managing to leverage growth in the key new markets of Europe,” Carl-Peter Forster, GM Europe President said in a statement.

In Eastern Europe (in which GM includes Russia), the company's sales surged by 58% year-on-year (y/y) to 220,400 vehicles, against a total industry growth of 35%, GM said. This enabled it to increase its market share in the region to 10.6%, up from 9% this time last year. Looking specifically at Russia, GM's first-half volumes jumped up by 60% to 181,138 units, significantly outpacing the market's growth of 35%, GM said. This enabled it to increase its market share to 11.3%, up from 9.8% in the first six months of 2007.

"In Russia, all GM brands are growing: Opel doubled its sales to 53,523 units sold and 3.3% market share, Saab is up 81%, Chevrolet up 49% to 125,701 units, Cadillac up 51% and Hummer up 21%. These remarkable results show that we have strong brands with an attractive portfolio of cars," Brent Dewar, GM Europe Vice President for Sales, Marketing and Aftersales commented in GM Europe's sales release.

Chevrolet Drives Brand Growth

Continuing the recent trend, only the Chevrolet brand is managing to gain any significant new volumes. Chevrolet's European sales grew by 24% compared to the first half of 2007 to a record 268,200 cars, which gave it a market share of 2.2%. Sales of the new Aveo grew by 58% in the period under review to 42,120 units while the Chevrolet Captiva sport utility vehicle (SUV) reported an 11.3% increase in sales to 22,320 units. "The Chevrolet brand performance continues to drive our sales momentum in Europe in 2008. We are growing our brand awareness, as we launch vehicles that are right for the market place, like the new Aveo," said GME's Dewar said in a statement.

The performance of GM Europe's other brands in the first half were as follows:

• Opel/Vauxhall: GM's highest-volume brand sold 848,308 vehicles in Europe in January-June of 2008, which was 1.7% or 14,500 fewer cars and LCVs than were sold in the year-earlier period. Market share stood at 7%. GM admitted that strong results in Central and Eastern Europe offset a considerable general market weakening in certain key Western European markets, such as Spain and Italy. Opel's Eastern European sales leapt up by 81.4% and by 17.2% in Central Europe.
• Saab: With first-half sales of39,418 cars, GM's premium Swedish brand saw its sales decline by 13% in the period, equivalent to the loss of 5,900 units.
• Cadillac: GM's global premium brand Cadillac, on the other hand, reported a year-on-year sales increase of 9.5% to 2,595 units. It should be noted that this equates to just 226 more Cadillacs sold compared to the previous year.
• Hummer: Likewise, Hummer sales jumped by 29.1% to 1,325 units, meaning that 300 more Hummer SUVs were sold in the first six months of 2008 compared with 2006.
• Corvette: Corvette sales slumped by 18.2% to 655 units, equivalent to the loss of 146 units in the first half.

Outlook and Implications

Troubles in the core Western Europe region, where GM Europe still sells the bulk of its vehicles, spells difficulties ahead. Any mention of Western Europe in GM Europe's sales release was notable in its absence. However, analysis by Global Insight shows that, with regards to passenger cars only, GM's Western European sales slumped by 7.8% in the first six months of the year, equivalent to the loss of 64,000 cars. This made it the second-worst performing group in the region in that time, ironically, second only to flailing Toyota, which lost a much more severe 12.2% of its Western European volumes (see Europe: 7 July 2008: Toyota and Hyundai Suffer in Western European Car Sales Slump). Figures from the pan-European carmakers' association ACEA for the first five months show that all three of the Group's volume brands (Opel/Vauxhall, Chevrolet and Saab) have lost car sales in Western Europe so far in 2008.

Opel/Vauxhall is about to launch the brand new Insignia D-segment car, which will replace the ageing Vectra. Traditionally a high-volume car in Western Europe, it will be interesting to see how this vehicle fares. Europe's D-segment has long been in decline, as buyers shun such executive saloon and estate models for newer and more exciting segments, such as SUVs, multi-purpose vehicles (MPVs) and crossovers. Unfortunately for GM Europe, the current climate of soaring fuel prices makes such bulky vehicles an even less enticing proposition.

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