As GM’s global value driven brand, Chevrolet is well positioned in emerging markets. But the brand is also building sales in developed markets – such as Western Europe. In the UK, Chevrolet enjoyed record sales in 2009. Dave Leggett talked to Chevrolet UK MD Mark Terry about prospects for the brand in the UK market.
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Chevrolet’s new small car, the Spark, is a big improvement on the Daewoo-inherited Matiz that it replaces. Chevrolet’s entry-level model now has a modern interior that comes with striking looks designed to appeal to younger buyers. Chevrolet UK’s managing director Mark Terry sees the new Spark as a key building brick in building the brand’s European sales.
“Our whole kind of mandate for growth towards a million units in Europe over the next 3-5 years is not to simply replace one car with another; it is about bringing in cars that take the brand to new segments and new customers,” he says. “Spark is moving us into a new customer segment – the more youthful buyer.”
Terry believes the design of the Spark is a key attribute in attracting young buyers, but he emphasises the need not to alienate the more traditional customer.
“Spark is funky, youthful and street credible. The low price point that comes with the car allows youth to tap into it. But it doesn’t compromise our traditional customers. It looks like a three-door and yet it has that five-door capability that our traditional customers might still need.
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By GlobalData“It can meet a new youthful customer segment while not ostracising the traditional customer. A product targeted at younger buyers does not necessarily deter older customers, though that is the case the other way around.”
Last year the firm sold 18,660 cars in total – a record for the brand in Britain. However, Terry stresses that he is not keen to chase volume, even if he could get more cars to sell – which he frequently can’t. Last year, Chevrolet hit allocation limits in Britain on the Captiva SUV, causing waiting times to lengthen. And the Chevrolet Spark allocation – 7,000 for 2010 – is subject to global distribution priorities.
He is pushing for growth, but not for volume growth at all costs. Chevrolet is looking to do more fleet business, but retail growth is strong and Terry is keen to get the right sort of fleet business.
“Just shy of 19,000 units is what I call our ‘index volume’ and I am looking to stretch beyond that in the future and that’s what I push the team to do. Last year we did 10,000 retail units and this year we are looking to do 13,000 units. There is a heavy retail focus and we are not looking to do short-cycle rental volumes, for example. On the corporate side, we are interested in end-user choosers and what I call ‘proper corporate business’.
“We could easily go past 20,000 if we wanted to say, do a couple more thousand rental, or British School of Motoring – that kind of customer – but we feel that with Spark’s supply being restricted in the sense that it is a global product in a global market, we want to make sure we are selling our allocation to good customers who are good for the long-term and represent healthy growth for business.”
Terry acknowledges that the UK’s scrappage scheme helped sales last year, but maintains that Chevrolet wasn’t chasing volume.
“We had a retail strategy that fitted the scrappage market environment. And we didn’t approach the market with a loss leader strategy to just grow volume; we wanted a good margin for us and for the dealer, as well as providing a good value product for the customer.”
He also says the scrappage story isn’t as clear as is often broadcast, as there are less obvious benefits.
“We had between 3,000 and 3,500 scrappage-registered vehicles, but many more customers were attracted by the retail environment we generated – the advertising, the price points. They then went on to buy vehicles but didn’t necessarily scrap their existing vehicle.”
Spark comes with a 1-litre and a 1.2-litre petrol engine (the former isn’t exactly perky, but the 1.2 is). No need to crowbar a diesel engine in then? Terry says a diesel is not consistent with the Chevrolet value proposition in this segment.
“We don’t think our customers require a diesel engine in this segment. The brand is very much about value. In the case of Chevrolet, we keep it simple and we are not charging the customer for things they don’t actually need or want. It’s a bit like warranty – we have a three-year warranty and that suits many of our customers who sell the vehicle on after three years.”
As well as the Spark, Chevrolet also has high hopes for the Cruze, introduced to the UK car market last September. The introductory body style is the four-door saloon, rather than a hatchback (with no news on the dates for other body styles), but Terry sees the saloon as a positive in looking for higher fleet sales.
“Our main thrust for Cruze is fleets. We are talking about the typical rep who needs a four door saloon with a secure boot [trunk] as well as private retail customers who have perhaps been used to driving a four-door company saloon and now are buying a car themselves.”
Cruze company sales are around half of its volume in the UK. Terry says there is a new emphasis on the fleet sector for Chevrolet now.
“We have taken control of our distribution and also now set up our own national fleet operation under national fleet manager Keith Jones. We are now getting that 100% focus for Chevrolet into the fleet environment. We expect our penetration of fleet markets to be rising.”
He is also excited about future product, beginning with the Orlando crossover which will be introduced in the UK late this year. And a new Aveo is coming later (a big clue was the Aveo RS concept shown in Detroit). Terry is also planning on selling the range extended electric Chevrolet Volt in the UK, though there is still work to be done in terms of whether it will be made in the UK and what government incentives may exist for such vehicles by 2012.
“We are absolutely planning to sell Volt in Britain. It is a crucial model for the brand globally. There is a lot of work going on in terms of where production is going to be in terms of the possibility of production at Ellesmere Port (UK). If that happens it will be made as a Chevrolet Volt and a Vauxhall Ampera on the same line. But whatever happens on the manufacturing side, we are certainly planning on selling Volt in Britain.”
Where could Chevrolet’s overall UK sales be in three years’ time?
“We could easily be up to 25,000 to 30,000 units over a three year period if we are back up to a 2.3m/2.4m unit market in Britain,” Terry says.
“Right now it is a very exciting time for us. We are a separate team now, 100% focused on Chevrolet – we all feel that passion and excitement you get with breaking records, with new product coming and ultimately with taking the products and the brand to new customers.”
Dave Leggett
