Question: What giant multinational company has managed to lose one-fourth of its U.S. market share in the past decade and become a paradigm of America's failure to compete with the Japanese?
Answer: General Motors.
Tougher question: What is the fastest-rising car company in Europe, a manufacturer whose product line is so sophisticated, so sensitive to shifts in market demand, that it has outperformed all its rivals in the past year?
Answer: General Motors.
More specifically, the Cinderella company is GM Europe, a Zurich-based subsidiary that makes and sells 1.5 million West German-designed cars a year bearing the nameplates Vauxhall in the United Kingdom and Opel on the Continent. Last year GM Europe built fewer than half as many passenger cars as the North American division's 3.4 million. Yet the European side accounted for half of GM's $4 billion in worldwide earnings and almost all the company's total profits from auto manufacturing.
The souped-up performance of GM's European branch offers a jarring contrast to the declining horsepower of the parent company in the U.S. While the European side has been earning a profit of $1,200 a car, the North American automaking operations are now losing money, analysts say. And while GM Europe boosted its market share from 8.4% in 1980 to 11% last year, the domestic company's portion of the U.S. car market fell from 46% to 35% during the same period. Why the sharp disparity in performance? A close look reveals that the two sides of GM are organized differently, are pursuing divergent strategies and are characterized by utterly dissimilar cultures. GM Europe's success, in fact, speaks volumes about the ills of the domestic company and may suggest ways to halt its alarming slide.
At a time when GM's domestic products are drawing mixed reviews, GM Europe's new cars and engines have garnered glowing write-ups in the auto-savoring European press. The manufacturer's success is owing in large part to the successful redesign of its market-leading subcompact, a car class in which the parent company has produced notable failures like the Chevrolet Chevette. The GM Europe subcompact, which goes by the names Opel Kadett and Vauxhall Astra, is now selling at the rate of 630,000 cars a year, making it the best-selling GM car in the world.
The European company is no one-hit wonder. The company has another best seller in its J-class car, sold as a Vauxhall Cavalier in the United Kingdom and as an Opel Vectra in other countries. Rolled out in 1988 to rave reviews for its advanced engines and styling, the Vectra also offers the best fuel efficiency in its class, split-folding rear seats and height-adjustable seat belts. The car can be equipped with an optional 16-valve, four-cylinder engine that even Mercedes engineers have hailed as the best multivalve motor in the world. GM Europe sold 364,000 of the cars last year, up 60% from 1988.