General Motors said on Thursday that it planned to scale back its Chevrolet brand in Europe over the next three years as the automaker strives to stanch losses and become profitable there.
Starting in 2016, G.M.'s strategy in Europe will focus on its Opel and Vauxhall brands as well as expanding its premium Cadillac marque. The automaker said that its decision to withdraw Chevrolet, the fourth-largest global automotive brand, was “largely due to a challenging business model and the difficult economic situation in Europe.”
Chevrolet will sell only “iconic vehicles” like the Corvette in Western and Eastern Europe, while continuing its broad presence in Russia, where the Opel and Chevrolet brands are more clearly distinguished, the company said.
“Europe is a key region for G.M. that will benefit from a stronger Opel and Vauxhall and further emphasis on Cadillac,” G.M.'s chairman and chief executive, Daniel F. Akerson, said in a statement Thursday. “For Chevrolet, it will allow us to focus our investments where the opportunity for growth is greatest.”
Meanwhile, G.M. will add to Cadillac’s distribution network as it prepares to introduce new vehicle models.
“Strategically, this makes sense,” said Joseph Spak, an analyst with RBC Capital Markets, in a research note on Thursday. The Chevrolet brand has lagged behind Opel and Vauxhall in market share in Europe, even as Chevrolet bought jersey sponsorship rights for the Manchester United Football Club.
“The hope was that Chevy would be able to compete at the lower-end of the market and Opel would be able to move upscale, but this strategy never really gained traction,” Mr. Spak said.
By scaling back Chevrolet’s presence in Europe, G.M. said it expected to record $700 million to $1 billion in net special charges through the first half of 2014. Those charges include asset impairments, dealer restructuring, sales incentives and severance-related costs. The automaker also expects to incur restructuring costs that will not be treated as special charges but will affect the company’s 2014 earnings from international operations.
G.M. said it would continue to provide warranty, parts and services for Chevrolet vehicles bought in Europe before 2016.