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GM Canada bets big on small cars in 2004
Counting on new models to boost declining market share

By GREG KEENAN
The Globe and Mail
Saturday, February 21, 2004

INGERSOLL, ONT. -- At the world's largest auto maker, it is small cars that are huge this year.

General Motors of Canada Ltd. is introducing a wave of new subcompact and compact cars -- mainly in its key Chevrolet division -- in a determined bid to revitalize its presence and regain dwindling market share in these crucial segments of the Canadian market.

"If we're going to grow our share, these are the products that are going to carry the load," Michael Grimaldi, GM Canada's president, said in an interview. "Our objective to grow our total share is really dependent on us increasing our share in this low portion of the market."

His company's bid to strike back puts the focus on subcompact and compact cars as a key battleground in the automotive market in 2004 and beyond, with the Detroit-based companies fighting back in niches where Japan and South Korea-based companies have made major inroads in the past five years.

While there is a flood of new passenger cars being introduced by GM, DaimlerChrysler Canada Inc. and Ford Motor Co. of Canada Ltd. this year, success in the smaller segments is critical. Altogether, compact and subcompact cars represent one-third of the entire new vehicle market in Canada. Adding to their importance, these are the cars first-time buyers generally shop for, so if auto makers can hook drivers here, they stand a chance of landing them for life.

"If we're going to recover share, we've got to recover what we've recently lost to some of the Japanese and the Koreans," Mr. Grimaldi said.

In the two segments, GM's share fell to 19.2 per cent last year from 28.4 per cent in 1999. Toyota Canada Inc. edged ahead of GM at 19.3 per cent.

But the dramatic increase has been in the performance of the two South Korean-based auto makers, Hyundai Auto Canada and Kia Motors Canada.

In 1999, they accounted for a combined 5.8 per cent. By last year, that had more than doubled to 12.4 per cent.

GM is fighting back with South Korean-made products of its own -- the Chevrolet Aveo subcompact, Optra compact and Epica mid-sized car, all of which are assembled at the GM Daewoo Automotive and Technology Co. joint venture and are already on sale. Later this year, GM's Pontiac dealers will start selling the Wave, another subcompact made in South Korea.

Other new compacts are coming, the Cobalt for Chevrolet to replace the aged Cavalier, and the Pontiac Pursuit, which replaces the Sunfire. Chevrolet also gets the Malibu mid-sized car and a version called the Malibu Maxx, as well as a new Corvette muscle car and the Equinox compact sport utility vehicle that was launched yesterday at the auto maker's joint venture assembly plant, Cami Automotive Inc. in Ingersoll, Ont.

GM is trying to duplicate at Chevrolet the success it has had at Cadillac, where a $4-billion (U.S.) investment in new vehicles such as the CTS sedan and SRX luxury SUV, backed by an edgy advertising campaign, has started turning around that brand's fortunes.

"Chevrolet is extremely critical," Mr. Grimaldi said, because it's one of the entry-level brands, but also attracts customers who have been driving competitors' vehicles.

The strategy is to establish what he called a "price/product ladder" that starts with Aveo at $13,820 (Canadian) and Optra at $16,190. Those two cars, combined with Cobalt, give Chevrolet a much stronger product offering in the low end than it has had in recent years when the division's only small car was the Cavalier. Hyundai, Kia and Toyota undercut that with subcompacts that were less expensive than Cavalier and Sunfire, as well as compacts that competed directly against the GM twins.

"I wouldn't want to be a Kia or a Hyundai dealer right now with GM having this product," said Paul Murray, who owns Murray Chevrolet Oldsmobile Cadillac in Medicine Hat, Alta.

FULL Article Here




GM Canada Optra5
 

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My only concern with all these Daewoo Chevys is they will steal sales from Cobalt and Malibu. Otherwise, GM certainly is leveraging it's global resources up here to really hit the competition hard.
 

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On the other hand, these cars might help Malibu and Cobalt in being more profitable with GM able to sell them without big rebates or offering a 10,000 dollar 1SV type Cavalier for the Cobalt. That would help resale value for the Cobalt and Malibu, something auto websites like Edmunds like talking about as a major reason to buy a Toyota or Honda. The low priced Daewoos won't need rebates like the Cavalier since the prices are already very reasonable.

As long as Malibu and Cobalt are money makers for GM, the factory workers should be happy and secure.
 

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I'm curious as to why the Optra is not marketed in the USA. From a superficial point-of-view, it seems like it's a pretty reasonable vehicle that would add to Chevy's USA sales without a significant negative impact on Cobalt sales.

I'm also curious to see how the competition will respond. To think that Toyota, especially with its new Scion brand, will roll over and play dead is a bit naive. Hyundai and Kia don't really seem up to the challenge, 7year/100,000 mile warranty and all.
 

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I read in a local newspaper that the Optra and Epica are a test for GM and if they co-exist with GM NA cars and also sell respectable numbers in Canada, they will come to the U.S. in a year or two.

The Optra and Aveo I see doing that but the Epica seems too close in price to the new Malibu. We shall see I guess. I have seen a few Aveos and Optras, have not seen a sigle Epica on the street yet.
 

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Epica is an amazing vehicle and sells for about $4000 less than a similarly equipped Malibu in Canada! Aveo and Optra are very well done as well! We look forward to the Optra 5
 

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Does anyone know if it is true that GM Canada will allow you to return your leased GM vehicle 9 months early? My local Saturn dealer told me that this is the case. If so I am thinking of ordering an ION 3 or maybe a Pursuit.
 

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We got out of our Cavalier lease early a couple of years ago, but only 3 months early. I'd be surprised if they would allow you to get out 9 months early.

I live in Ontario by the way.
 

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Well after a week of playing phone tag with my dealer, I got the test drive set up. One problem they don't have an optra 5 only optras. Why you ask? Well it seems every single optra5 for the first production run went to Eastern Canada. If I want one I have to wait until APRIL OR MAY!!!!!!
 

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Originally posted by Artie@Feb 22 2004, 01:55 AM
i would buy a 2004 mini cooper if i wanted a small car
Ahh have you compared the prices of a Mini to the Optra, Cobalt or theAveo?
Size and price are not the same.
 

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I've seen handful of Aveo5's, 1 Aveo sedan, 2 Epica's, 2 Malibu's, and 1 Optra.

This better payoff for GM.
 
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