Opel Australia dealers walked into last Friday’s meeting in Melbourne expecting exciting news about new vehicles and fresh marketing direction.
“We all went there with a great air of anticipation,” one metropolitan Opel dealer principal, who asked to remain anonymous, told CarAdvice.
“We had believed that we were going to a meeting to outline new model plans, new marketing direction, new strategy, because certainly in the pipeline to launch was the new Zafira (pictured below) and the Mokka, and the invitations were issued on that basis, so we were all very excited at the meeting at the prospect.”
The reality could not have been more different.
“The meeting started at 1pm,” said the dealer. “It was scheduled to finish at 4pm. We were on the streets at 1:45pm.
“It was made very clear. [Opel Australia managing director] Bill Mott stood up there and immediately said the reason for the meeting is that we’re announcing that we’re closing down, which was a surprise to us all.
“Clearly dealers were losing money and it was a big financial strain for Opel, but to pull the pin after a year is very surprising. Normally you’d give it a couple of years.”
The dealers weren’t the only ones surprised by the announcement. Opel Australia marketing and public relations boss Michelle Lang said she was made aware of the decision to close down the German company’s local operations last Tuesday night.
“I was working away on my presentation thinking we were talking about a Mokka launch,” Lang said.
“We had presentations prepared to that effect, that was the purpose of the meeting, but obviously that purpose was superseded by the more pressing message once it was made and communicated to us. [The dealers’] expectations were in line with a lot of our expectations.
“We could have either rung them before without any answers or worked our tails off and try to have answers for them on Friday, which is what we did.
“It’s unfortunate how quickly it all happened.”
In an official statement on Friday, Opel said that in order to be competitive it would need to cut the price of its core models significantly, resulting in a business case that was not financially viable for either the company or its 20 Australian dealers.
One of those dealers told CarAdvice they believed the catalyst for the closure decision was Opel’s inability to get the pricing right for it’s core model, the Astra.
“When they set up here they assumed they would achieve a price premium,” the dealer said.
“If they’ve learnt anything in the year of trading – certainly on Astra – is that the price premium isn’t there. It’s a $19,990 market. If you can’t start at $19,990 you’re just not in the hunt, and the point was made that in all their analysis and planning they just could not get Astra to that price point, or if they could it just didn’t make economic sense, so the whole basis of the business wasn’t there.
“And that’s really the key: when they couldn’t get the core product to the right price point, the whole deck of cards fell down. It really was as simple as that.”
The dealer admitted Opel was “perhaps a little naïve” in its strategy heading into the Australian market.
“The target brand for them would have been Volkswagen, and Volkswagen achieve a little bit of a premium, but nothing too dramatic.
“I think they assumed they could achieve whatever premium Volkswagen was achieving but that was not the case.”
The Astra was priced from $23,990 before on-road costs, making it some $2500 more expensive than the entry-level Volkswagen Golf 90TSI. Opel sold 758 Astras between January and July, giving it a meagre 0.5 per cent share of the 145,858-unit sub-$40K small car segment.
One dealer told CarAdvice his and every other Opel dealership operated at a loss simply because they could not sell enough cars.
“When you take on a new franchise you do your sums based on a certain number of vehicles per month at a certain gross profit per vehicle, and the fundamental volumes were just never there from day one.”
Dealers have been informed they will be compensated for unsold and demonstrator vehicles, as well as parts, tools and signage, but remain in the dark about additional financial support beyond that.
“All of the dealers traded at a loss, so the question mark is whether there will be compensation for trading losses, and that’s what we don’t know,” one dealer said.
“We’ll be out of pocket. We haven’t had that discussion with them yet so we don’t really know how far that will go.”
One dealer said it would also pursue Opel for compensation for the cost of its soon-to-be-empty showroom.
“That will be a discussion point with Opel, yes.”
Lang said details of compensation for dealers were still to be finalised and would be specific to each individual dealer.
“It’s a case-by-case scenario, so we can’t say unequivocally what we’ll do, and I can’t really confirm anything anyway because it’s commercially privileged information as far as what we agree to,” she said.
Lang said Opel’s current focus was to prioritise its customers and dealers to ensure that it met all of its obligations to them.
She said Opel was currently in discussion with sister company Holden’s dealer network about future vehicle servicing, and said while striking an agreement with Holden was “the most likely scenario” it had not been signed off at this stage.
One dealer told CarAdvice the majority of customers had been relatively accepting of the situation.
“The customers that we’ve talked to have been understanding. They’re not feeling abandoned, it’s been quite good.
“It’s very good that you can reassure them that your ongoing parts and service requirements can be met.
“And in terms of resale value, I honestly think that a used Opel in a couple of years time will be good used-car property, because the car is a German-built and -engineered premium car – particularly the OPC models, which are outstanding cars, they’re going to become very good property, they’re going to be quiet well sought after.”
One dealer said it planned to continue selling its vehicles at least until the end of the month.
“[Opel has] given us some very attractive liquidation pricing and we’ve had very good reaction from customers on that, and we’re selling cars.
“We sold two cars yesterday and we’ve got a lot of prospects today, so we’re quite confident of being able to [sell] quite a bit of our stock.”
Lang said it was unclear at this stage how long it would take to completely wrap up the local operations.
“It will vary from dealer to dealer and there’s various legal constraints and boundaries that will have an impact on, that so I can’t really comment much further.
“All the Opel dealers are still operational as it stands right now. We need to come up with an agreement to terminate our agreement with them to sell the cars, so until that’s actually happened – and it has been less than a week – the Opel dealers are still operational.”