Adam Opel GmbH, the automaker surviving on 1.5 billion euros ($2.2 billion) in German government loans, is ready to take on Volkswagen AG’s Golf with a new version of its Astra compact.

The carmaker being sold by General Motors Co. packed its best-selling Astra with technology such as a traffic-sign recognition system to set it apart from competition including the Ford Focus and Fiat Bravo. Opel said it plans to display the model at the Frankfurt Auto Show this week.

As European “cash for clunkers” programs expire, Opel will have to overcome a potential slump in demand, especially for small cars that benefited most from the incentives. Unlike VW, Opel can’t rely on emerging markets for growth because it’s blocked from selling in countries such as China under GM’s agreement to sell a majority stake in Opel to a shareholder group led by Magna International Inc.

“Without the Astra at least fulfilling expectations, the restructuring money would be wasted,” said Christoph Stuermer, a Frankfurt-based automotive analyst with IHS Global Insight, who estimates that GM has invested about $2 billion in developing the Astra. “It’s 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 Ruesselsheim, Germany-based Opel and its U.K. 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 carmaker’s Web site.

Fuel Consumption

The sporty compact will compete with new versions of the Golf and Renault SA’s Megane introduced within the past 12 months. At the Frankfurt Auto Show, which starts Sept. 17, Volkswagen plans to show a more fuel-efficient version of its Golf, which was named the 2009 World Car of the Year.

Source: Gasgoo


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