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CAR interviews Vauxhall boss Karl-Thomas Neumann (2014)

Published: 29 December 2014

To mark Vauxhall’s all-new Corsa going on sale in January 2015, CAR publishes for the first time a revealing interview with Vauxhall big boss Karl-Thomas Neumann, the man who runs GM Europe.

The ex-Volkswagen China chief, who joined GM two years ago in January, talks openly about GM Europe’s turnaround plan, reviving the flagging Opel brand, how crossovers such as the Mokka and next Meriva and Zafira drive growth, and how Vauxhall will lead on connected cars. Read on for an in-depth insight into life at GM, from an interview conducted in the summer.

CAR: You’re renowned as an incredibly optimistic leader, and I’m a deeply sceptical journalist, so I’ll put some challenges out there and ask how you’re tackling them. Opel is a less well-loved, non-premium brand, you have some high-cost factories which can’t export from Europe so you’re reliant on making this market work, and there’s a perception out there that GM Europe is a technology laggard…that’s my depressing world view: how do you bounce back from that?

K-TN: That’s a perception with some truth and some falsehoods in it. Where it’s true we have to fix it, and where it’s false we also have to fix it because perception is reality. It’s wrong to say we’re a purely European manufacturer: we are part of General Motors, and we’ve put big attention [to ensure] future product sits on global modular architectures so we can benefit from the scale effect. Two cars where we couldn’t do this – the two crossover vehicles, the next Zafira and next Meriva – there was nothing in the corporation which we could use, so we partnered with Peugeot-Citroën. It’s a purely European play. I would agree with your scepticism that it’s not enough to make 1million cars across the full spectrum of product – so we have to sit on global platforms. That’s done. The same is true for engines and gearboxes.

In terms of Opel, it’s not a premium brand, it’s a weak brand, yes, it has suffered big time, but it has 140 years of German history. If you ask anyone in Germany, the awareness is close to 100%. We went through a period when our product was not as attractive as it should have been, we went through a period where we had quality problems. That meant in the last 20 years our market share declined. This caused huge problems both in the manufacturing footprint but also in brand reputation. We have a high attention on fixing these brand issues, with a campaign in Germany called ‘Re-park in your Head’. [We’re asking] ‘why don’t you have another look, it’s outdated what you’re thinking’.

I say without doubt that we have great product now that can live up to any competitor brands in terms of looks and content. Vauxhall is another story, it’s a British brand with a British heritage and we want to keep that. The brand is much better off because it is the second strongest brand in Britain, but it needs to be taken on a journey, polished up, renewed and modernised: brand is a huge focus.

That situation of losing market share because of product and brand reputation led to overcapacity, so we needed to fix this and we have taken major steps to do that. We are closing the Bochum manufacturing plant at the end of 2014, we will bring in volume from outside into Europe, the Mokka, which is the most successful small SUV in Europe right now with more than 240,000 orders. Its success came from entering a new segment; we produced it in Korea but we brought it to Spain to [help] fill our European factories. We create a little export business with Opels to become Holden-badged cars [for Australia], and Buick-badged cars for North America, but the main part of the growth has to come from winning market share in Europe. For 14 years we were losing market share, so it was important [in 2013] that we won market share again, and this year we are proceeding with this.

CAR: But is it not a case that a rising European tide floats all boats, or do you have a secret weapon that’s working for you?

The wave that is rising pulls us up; [in the first half of 2014] we had 4% more sales compared with first half last year, we are winning marginal market share, it’s not like we are winning big time, it takes time, but it’s a very different picture. Here in the UK in June we did extremely well, close to 12%, but there are also markets where we have lost some share like in Russia, where we decided we needed to increase prices because of the rouble situation: we won’t accept losses there.

The main picture is good, but the market in Europe is not growing 4% - it’s basically flat, but in the UK, Germany, Spain, we are growing in all these markets. How can we win market share? It’s with product. Mokka is the best example, it’s a brand ambassador because it’s getting new customers into Vauxhall/Opel stores.

CAR: Is Adam a success?

I would say clearly yes, but it differs by country. Its major success is in attracting new customers, young people, very often female, but it needs time because the car has to be seen on the roads, and it needs advertising. In Germany we had a great campaign which has made it really successful, in the UK it’s now picking up and it’s a great ambassador for the Vauxhall/Opel brands.

Click here to read CAR's Vauxhall Adam review

CAR: Let’s focus on Opel brand – why buy an Opel? This is the fundamental thing, what does the brand offer?

That’s a question many people couldn’t answer. Clearly it has to be about emotions, excitement, like it used to be when Opel had breathtaking cars, polarising cars that made a statement. We need to get there again and we do with the Insignia, Astra GTC, Mokka and Cascada, which is a true beauty.

We try to excite people about the emotional aspect of our design and our features, so that they really want to have the car. They should also have confidence in the car because we build on our German history. I talk to the engineers, tell them ‘you can do better’, and when they hear that, which they haven’t heard for a while, they really go the extra mile to make it a German-engineered car, with quality and precision you can feel. And it should also be affordable: we are not premium, we are in the middle of society, not cheap but affordable, something which you really want but you can also get.

CAR: I’m interested in what you tell the engineers: thinking back, Ford used to talk about quality and driving dynamics, then best in class for economy and emissions; is there a particular tangible area of product development where you can lead?

In quality for example there is no compromise, you have to fulfill customers’ quality expectations. It’s also about how you deal with your customers and their satisfaction, but beyond you’re perfectly right, [we] need to define areas where we can take the lead.

The area where we are aiming to get ahead of the pack is connectivity and infotainment. Take Adam: the [Intellilink] system is £275: it connects to the intelligence on your phone, the navigation, internet music, it basically mirrors the phone. It’s simple, beautiful and it’s won prizes all over Europe for its functionality and its price. We have to get to there.

In the new Insignia we have cleared the whole complexity of the dash, made it a touchscreen with a very high content type of infotainment, I think there we still need to make it simpler, easy for everyone to use it.

Then there’s the connectivity, the reach of this is still overlooked in the media: we have said we will not wait for the European Commission to come up with legislation about the ‘e-car’, we will put it into the majority of our cars as standard and it will be available for every car. E-car is basic functionality but we will bring a 4G modem into the car so we have a wi-fi hotspot in every car. Every car becomes a note in the internet, so we can access the car’s system, to remote diagnose, service it, upgrade it and start creating all kinds of services around it which will be a new experience for the customer in this segment. It will democratise the technology here and make it available for the Corsa driver which they wouldn’t expect.

CAR: What is exceptional about the new Corsa?

Have you driven it? It’s really a big step, it’s hard to believe that but how this thing drives, steers, how direct it is, how compact it feels, it’s a new dimension. Then we have new engines, the three-cylinder which is so good: I was sceptical of these engines, thinking ‘I don’t want my future to be in a three-cylinder’ but I can say with full self-confidence, we have invested in this engine. We have the balance camshaft, we invested in doing a great three-cylinder engine. We  upgraded the interior to make it really modern with the ‘Intellilink’ navigation and infotainment system, it will come over as a fresh modern compact car for a modern generation with great engines.

Click here to read CAR's review of the new Vauxhall Corsa

CAR: Is there quite a lot of carry-over in the structure, is the floorpan much the same?

It’s not a secret, we have taken some structure, so what? We found it was still okay, still good, and we want to avoid unnecessary investment here. But we made it totally different with all-new suspension hardware, drivetrains, with all-new steering, interior, and exterior styling, and so I don’t think any customer would have any doubt that this is a new-generation car. Even though we reused some of the core parts of the old car, which I think is smart.

CAR: Your target is GM Europe in the black by mid-decade: what are the indicators you watch closely to assess how the business is doing?

Factory utilisation is vital: we rightsize and fill that. Second is material cost which is a huge, huge subject of attention. It comes from the scale, efficient engineering, it comes from standardisation throughout the different vehicle families, it comes from re-use sometimes by the way, but it is absolutely core.

The second one on the sales side, we have a long way to go, we need to win market share, we need to convince our dealers who have suffered with us through the last years that it is right to invest in us. But we’ve come a long way on this too, with a whole different attitude of the dealers. They are excited about what we are doing, they need to focus now on giving the right customer experience with every contact they have with us.

With the product, I’m convinced we have great stuff in the pipeline, but the major concerns are customer satisfaction and the material cost of the cars.

CAR: Does the recall issue in America have any ramifications for Europe, especially as complexity and scale increase?

It’s obviously a very challenging situation for the corporation, and I’m a manager with responsibilities in Detroit too. In Europe, fortunately only the Opel GT is affected, and it’s fortunately only a few thousand cars, so we have been lucky.

We have of course very stringent mechanisms in place here and we are confident that we can avoid such issues in the future. But I’m fully aware with the scale which future modular architectures create, such things simply can’t be allowed to happen, it could be a disaster for the company.

That’s why we are closely following what we are doing in the states, about the integrity of the organisation, we are mirroring this over here and see this as an opportunity to introduce new processes to further add confidence that we can avoid such situations in the future.

CAR: Chevrolet has pulled out of Europe: give me an appraisal of what this opportunity means for Opel?

It’s okay, it’s even good to act with different brands in a market because there is increasing customer segmentation. But the brands have to be clearly separate, Chevrolet’s positioning was very much on the budget side in Europe, which is not Chevrolet’s world positioning, because of the Daewoo history, and that simply didn’t work with the product we had. [Opel and Chevy] had increasingly similar product in the showroom where one was going for budget customers and the other going for middle customers, which led to all kinds of problems in the showroom, and it also led to problems with the financial performance of Chevrolet in Europe. So we concluded that we were much better off to invest the money into Opel and Vauxhall, which are two brands on the rise where we are already spending $5billion to get the product portfolio right here, and focus on doing one thing right rather than diversifying and do five things half as well.

CAR: Oh yes, the $5bn gives us 23 cars…

KTN: We upgraded it already: 23 new cars was until 2016, now we’ve done a count until 2018, and we were surprised ourselves, it’s 27 cars now.

CAR: How does that split between replacing the core and exciting new niche opportunities?

Of course we are maintaining and replacing the core, but we are fully aware that if we want to get to the 8% [Opel’s European market share target] we need to go into new segments like we did with the Mokka.

We are also aware that segments are changing, the whole crossover segment where we are not really present yet, we did start with Insignia Country Tourer which was immediately outrageously successful.

We already said that the next Zafira, the MPV segment, also the next Meriva won’t look exactly like their predecessors. They will be more crossover-ish, younger, more modern, more urban, more interesting and more emotional. With these we hope we can create more segments like Opel in its history. The Zafira and Meriva were new segments, shrinking now, but segments created by Opel.

CAR: Does that mean the end of fantastic door concepts and great versatility? Zafira and Meriva might not be that desirable but some of the ingenuity initially blew our minds…

Yes but Zafira became too expensive and too large, we were not hitting the market sweet spot. We are watching where are the growing segments, and asking how big and how expensive can these cars be? We want some engineering innovation, but not just for the sake of it. These cars have to hit the sweet spot of the market, with emotional design, great features that put a smile on your face which you can be happy about every day, and some selected innovations.

Click here to read CAR's Vauxhall Meriva review

CAR: What about larger cars, such as the Monza concept? But it’s a hugely challenged market, the Japanese are stepping back, is there always a place for a big Opel/Vauxhall?

The big Opel/Vauxhall is the Insignia, beyond that it’s not currently the highest on my agenda. Everything beyond that is shrinking, it’s where we have more conservative buyers than in other segments so it’s more difficult for us to get there, and we believe the traditional [definition] of luxury and premium is changing. I see an Adam much more as the modern premium, where you have total individualisation possibilities, where we can create some additional margin out of this – it’s a smarter and more modern way to go. I have more urgent product ideas than a car beyond Insignia, even though everyone says you should do a Monza or a large Opel again.

By Phil McNamara

Editor-in-chief of CAR magazine

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