Opel was ready to take on the Volkswagen (VW) Golf with a new version of its Astra compact, the German car maker said yesterday.
Opel, which is surviving on e1.5 billion (R16.4bn) in government loans while General Motors (GM) finds a buyer, has packed its best-selling Astra with technology such as traffic-sign recognition to set it apart from competition including the Ford Focus and Fiat Bravo. Opel will display the model at the Frankfurt car show this week.
As European "cash for clunkers" programmes expire, Opel will have to overcome a potential slump in demand, especially for small cars that benefited most from the incentives.
Unlike VW, Opel cannot rely on emerging markets for growth because it is blocked from selling in countries like China under GM's agreement to sell a majority stake in Opel to a shareholder group led by Canada's Magna International.
"Without the Astra at least fulfilling expectations, the restructuring money would be wasted," said Christoph Stuermer, a Frankfurt-based automotive analyst at IHS Global Insight, who estimated that GM had invested about $2bn (R15bn) in developing the Astra. "It is Opel's make-or-break model."
The Astra, the first model built using GM's new small-car platform, accounted for 30 percent of the 1.5 million vehicles Opel and its UK sister brand Vauxhall sold last year.
The revamped Astra boasts a system that warns the driver when the car veers out of its lane, while steering and suspension can be adjusted between sporty and comfort-oriented driving styles, according to the group's website.
The sporty compact will compete with new versions of the Golf and Renault's Megane introduced within the past 12 months. At the Frankfurt car show, which starts on Thursday, VW plans to show a more fuel-efficient version of its Golf, which was named the 2009 World Car of the Year.
The new Astra's engines will cut fuel consumption and carbon dioxide emissions by 12 percent, which may help Opel woo buyers because of tax rules in European countries such as France that make it cheaper to own a less-polluting vehicle, said Kaushik Madhavan, an automotive analyst at Frost & Sullivan.
"If they can position Astra in these carbon dioxide bands, it could help Opel," he said.
The outlook for the western European car market, destination for most of Opel's sales, does not bode well for the car maker. Demand may shrink 10 percent next year, led by a 29 percent drop in Germany, according to JD Power Automotive Forecasting in England.
"Refreshed competition is going to make it tougher for the Astra at a time when the marketplace is so weak," said Jonathon Poskitt, an analyst at JD Power. - Bloomberg