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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
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
