GM sharpens focus on small cars; Bringing overseas models to the U.S. key to success

[Ming]

GM sharpens focus on small cars; Bringing overseas models to the U.S. key to success
By Shawn Langlois
MarketWatch
July 17, 2008

Also See: The 2010 Cruze and the Incredible Growing MPG Rating

Are Chairman Rick Wagoner and his crew finally moving fast enough to adapt to the changing times?

"GM's product mix has a long way to go to catch up with the competition," Jessica Caldwell, analyst at car-buying research Web site Edmunds.com, said. "Management is saying the right things right now, but they're usually behind the curve and always seem to be re-correcting themselves."

The future for GM hinges on this drastically tweaked approach to the U.S. market, whose denizens no longer yearn for lumbering trucks and SUVs.
Cars like the redesigned Chevy Malibu and the upcoming Volt will likely become the new face of a company known more, at least in recent years, for its Escalades and Hummers.

The GM braintrust knows this, reminding investors during the otherwise gloomy assessment of its financial condition on Tuesday that 11 of its last 13 products and 18 of its next 19 will be cars or crossovers. See full story.
"We are conserving our capital for those things that we know will move the mark," GM Vice Chairman Bob Lutz said on his blog. "We will continue to cut costs and adjust to changing market demands. We will adjust our portfolio to meet the market where it is headed."

Toyota and Honda, with the Yaris and Fit, already have these kinds of cars to join their hybrid lineup. And they've quickly become staples in the fastest-growing car segment.

Bringing a car like the concept Chevy Beat or Cruze, originally destined for overseas markets, to the U.S. could go a long way in satisfying these customers, making GM a strong contender in the popular segment. Though timelines are hazy at best.

"The Cruze and the Beat would do very well in the U.S., which is becoming more and more like Europe and Asia in terms of consumer tastes," Caldwell said. "GM makes some really good cars abroad, and they need take advantage of what they already have in their portfolio, maybe improve upon them and manipulate them to fit U.S. tastes."

She added that GM is capable of bringing these kinds of vehicles over to the U.S. market much faster than developing a new model from scratch.

The Chevy Beat, a subcompact designed and to be built in South Korea, won't arrive in the U.S. at least until the next generation, whenever that is. Lutz made it clear during a press conference Tuesday that the car wasn't engineered for safety standards in the U.S. and a GM spokesperson confirmed there are no immediate plans to add it to the Chevrolet portfolio.

Still, the Beat is a good example of the kind of vehicle that could drive sales and help reverse the perception GM can't compete in the surging segment.
The Chevy Cruze, however, is in the pipeline, slated to eventually replace the Cobalt, which could use a facelift. GM has proven capable of reinvigorating a stalled model in the case of the Malibu, left for dead before the 2008 version drew rave reviews and pushed sales higher.

David Silver, analyst at Wall Street Strategies, said he still doesn't understand what has taken GM so long to bring some of these models to its home turf.

"The company has been dragging its feet ramping up production for the smaller cars," he said. "I think management has secretly been holding out hope that oil and gasoline prices would drop drastically and Americans would again flock to get the SUV and light trucks."

To be fair, to go along with the Cruze, Chevy has three other small cars or crossovers in the U.S. pipeline in the next three years, including a redesigned Aveo, the Traverse midsize crossover and a new version of the Equinox compact crossover.

A few years from now, GM's lineup will hardly be recognizable to those that have followed the automaker's product path over the past 100 years. Now it's all about small, not big. Miles per gallon, not horsepower. Four cylinders, not V-8s. And, of course, cars not trucks.

SOURCE

[Ming]

David Silver, analyst at Wall Street Strategies, said he still doesn't understand what has taken GM so long to bring some of these models to its home turf.

Well it certainly wasn't for lack of people like me asking for this in fan forums like GMI since around 2004 or earlier (around when it became apparent that GM was starving its cars for trucks and SUVs and getting a bad reputation for it while Toyota and Honda were building up their image as the default makers of reliable and fuel efficient small cars).

But "no one wanted small cars and everyone wanted trucks and SUVs" back then, if you ask Bob (with his typical hyperbole).

Negativity aside, I am very hopeful for this shift of focus, even if GM management was pulled kicking and screaming into it. I just hope we don't see any small car plans scrapped by the quarterly earnings mentality when or if gasoline prices dip down to levels where SUVs and Trucks start selling better for a few months in a row.

[RamJet502]

The Cruze and Beat would be perfect now, can they get them here any sooner?

[GAIntrigue]

This sounds vaguely familiar to me. Wasn't the Astra supposed to be an out-of-the-ballpark hit for GM?

[Ming]

Originally Posted by GAIntrigue

This sounds vaguely familiar to me. Wasn't the Astra supposed to be an out-of-the-ballpark hit for GM?

The Astra was introduced in Europe in 2004 with about the same styling as what we only recently got here, if memory serves. Actually, I think they had multi-toned leather interiors with Navigation as well (not sure if our Astra has those colors now). Imagine how well 4-year-old models of ours would do, exported overseas. Especially with poor advertising to back them.

I remember drooling over photos of the "new" Astra way back when. Since then, the impact had long worn off as cars like the Mazda 3, etc. came over here and the Astra's styling no longer looked so amazing for a compact car.

I distinctly recall comparing concept-production auto show photos of the "new" Astra back then to the Cavalier and Sunfire and being appalled. You might find a thread or two if you dig way, way back here at GMI.

In addition to the limited dealer network and the value-packed 4-cyl. Aura that slots right on top of upper trim Astras (my sister went to buy an Astra and ended up in an Aura because of pricing and options), I've never seen anyone mention how the Astra had to build on the awesome success of the ION...

[GAIntrigue]

Originally Posted by Ming

The Astra was introduced in Europe in 2004 with about the same styling as what we only recently got here, if memory serves. Imagine how well 4-year-old models of ours would do, exported overseas. Especially with poor advertising to back them.

I remember drooling over photos of the "new" Astra way back when. Since then, the impact had long worn off as cars like the Mazda 3, etc. came over here and the Astra's styling no longer looked so amazing for a compact car.

I distinctly recall comparing concept-production auto show photos of the "new" Astra back then to the Cavalier and Sunfire and being appalled.

Point taken. Let's hope the shortened delay between introducing these cars in the global markets versus the U.S. market fairs much better this go around.

In all fairness to the Astra, I think the 2-door hatch is the sharpest looking, non-sports small car in GM's current N.A. stable.

Oh, by the way, your sister and I seem to have been in the same story book. I went to Saturn for the Astra. I came home with a V6 XE Aura because of the great lease deal I got. It also didn't help the salesperson kept pushing me away from the Astra by saying it was under-powered and utilitarian.

[Ming]

Originally Posted by GAIntrigue

Point taken. Let's hope the shortened delay between introducing these cars in the global markets versus the U.S. market fairs much better this go around.

In all fairness to the Astra, I think the 2-door hatch is the sharpest looking, non-sports small car in GM's current N.A. stable.

Well, you'd certainly have a strong point if GM was planning on producing the Cruze in Europe for export here. The Astra, as I edited above, does not compete well in pricing with its bigger brother, the Aura (or with other small cars), and because of it, my sister now has one in her driveway. The Euro/Dollar situation is just too harsh.

Thankfully the word is that Lordstown will be manufacturing the Cruze, and that they have a model stashed away in secret there.

[ronald mcretard]

Originally Posted by Ming

Well it certainly wasn't for lack of people like me asking for this in fan forums like GMI since around 2004 or earlier (around when it became apparent that GM was starving its cars for trucks and SUVs and getting a bad reputation for it while Toyota and Honda were building up their image as the default makers of reliable and fuel efficient small cars).

But "no one wanted small cars and everyone wanted trucks and SUVs" back then, if you ask Bob (with his typical hyperbole).

Negativity aside, I am very hopeful for this shift of focus, even if GM management was pulled kicking and screaming into it. I just hope we don't see any small car plans scrapped by the quarterly earnings mentality when or if gasoline prices dip down to levels where SUVs and Trucks start selling better for a few months in a row.

Sadly I think we all know this could easily happen.

[kenman923]

These cars better be segment busters in order to compete with the foreign auto makers.

[Olds88]

Originally Posted by Ming

Well it certainly wasn't for lack of people like me asking for this in fan forums like GMI since around 2004 or earlier (around when it became apparent that GM was starving its cars for trucks and SUVs and getting a bad reputation for it while Toyota and Honda were building up their image as the default makers of reliable and fuel efficient small cars).

But "no one wanted small cars and everyone wanted trucks and SUVs" back then, if you ask Bob (with his typical hyperbole).

Negativity aside, I am very hopeful for this shift of focus, even if GM management was pulled kicking and screaming into it. I just hope we don't see any small car plans scrapped by the quarterly earnings mentality when or if gasoline prices dip down to levels where SUVs and Trucks start selling better for a few months in a row.

I don't think GM should scrap any plans. I really hope they update GMT900 on schedule. My plan is to purchase a 2012-2014 Avalanche to replace the 07 in my driveway (or a Suburban if Avalanche has ceased to exist). I don't think I'm GM's only truck customer that isn't planning on downgrading anytime soon. Either that or give me a truly full-sized RWD station wagon (the Holden Sportwagon isn't) packing some flavor of the Chevy small block.

[megeebee]

"Bringing overseas models to the U.S. key to success"

It never has been before. The Astra is the latest Euro car to meet with yawns.

The Catera comes to mind, as well.

Opels sold with Buicks, then Opels dressed as Cadillacs, now Opels as Saturns.

Even the Vue, based on a GMDAT vehicle, isn't selling as well as the American one it replaced.

[jcgable]

Originally Posted by Ming

Well it certainly wasn't for lack of people like me asking for this in fan forums like GMI since around 2004 or earlier (around when it became apparent that GM was starving its cars for trucks and SUVs and getting a bad reputation for it while Toyota and Honda were building up their image as the default makers of reliable and fuel efficient small cars).

But "no one wanted small cars and everyone wanted trucks and SUVs" back then, if you ask Bob (with his typical hyperbole).

Negativity aside, I am very hopeful for this shift of focus, even if GM management was pulled kicking and screaming into it. I just hope we don't see any small car plans scrapped by the quarterly earnings mentality when or if gasoline prices dip down to levels where SUVs and Trucks start selling better for a few months in a row.

I would just like to say hat you might just be one of the most insightful and well adjusted members of the site.

Which is why you have to leave. We have no space for rational people with a moderate view of things...

[jcgable]

Originally Posted by Ming

Thankfully the word is that Lordstown will be manufacturing the Cruze, and that they have a model stashed away in secret there.

As in another new model that we have not heard about??? Do tell.

[vcs2600]

"We are conserving our capital for those things that we know will move the mark," GM Vice Chairman Bob Lutz said on his blog. "We will continue to cut costs and adjust to changing market demands. We will adjust our portfolio to meet the market where it is headed."

It is a good point that money is tight at GM, and therefore it might be necessary to delay some products by a year or two (e.g. Cruize and Aura/Insignia). Especially if a deep recession is likely.

I'm not particularly happy about it, but if it means GM can afford to advertise these products properly, it probably is the right decision.

[Ming]

Thanks jcgable, but I must admit some selfishness in my focus on GM focusing on small cars (again). See, I was a fan of small GM cars back when it wasn't cool to be a fan of GM small cars. I regret selling my 4-cylinder powered 1986 Pontiac 6000 station wagon and I'd love to own a 1987 Buick Skyhawk Turbo hatchback coupe. The reliability was not great, and the rampant rebadging awful, but the concept, the fuel economy, and the price points of those 1980's GM cars were spot on.

Add on top of that my experiences with small cars in Japan, and you have what made my tastes end up where they are today, after a couple of years of being distracted by larger cars and trucks and "bigger is better" mentality (I still love my Bonneville, though).

The majority of traditional GM fans on a site like this are more than likely going to be Camaro/Truck/Corvette/Big Sedan Cadillac/SUV big-horsepower types of guys. So I've developed a thick skin over the years, and just keep pushing my point of view, hoping someone will listen before it's too late, and my chance to see cars like those I liked so much return are gone, never to return.