GM plans budget car range for Europe

General Motors plans to enter Europe's entry-level car market with a line of low-cost models as it seeks to claw back market share lost to budget rivals.

GM, which is fighting to return to profitability in Europe, covets the entry-level segment carved out by budget brand Dacia, which has leveraged strong appetite from Europeans hit by austerity to become the continent's fastest-growing carmaker.

"Dacia is a great thing. [GM] is definitely not Dacia, but this whole budget and entry-level market segment is very interesting. They can be admired," said Karl-Thomas Neumann, chief executive of Opel, GM's European business. "We are definitely looking at the segment."

Costly decision

GM is planning on using the low-cost line to replace the gap left by the costly decision to withdraw Chevrolet from Europe last year. “We had Chevrolet, which looked like a budget brand, but it was not,” Mr Neumann said. “We think there is some possibility for Opel to come up with some entry-level product, specifically now Chevrolet is out of the market.”

Dacia, a Romanian manufacturer owned by Renault, has become the French carmaker’s most valuable asset in Europe. Its no-frills approach chimed with customers feeling the pinch from high unemployment, sluggish growth and government spending cuts.

Sales of its low-cost hatchbacks and SUVs, which offer minimal customisation and add-ons to keep costs down, have risen 61 per cent over the past two years, against a total European market that has fallen.

GM is eyeing a small SUV and a compact car at similar price points to Dacia as part of the move towards the entry-level segment, Mr Neumann said. But he said turning round Opel was the first priority. – (Copyright The Financial Times Ltd 2014)