Joined
·
750 Posts
GM thinks big with small Cobalt
New model seeks to turn tide of losses
Ed Garsten / Charles V. Tines
The Detroit News
STERLING HEIGHTS — Small cars and big profits are two ideas that go together about as well as Los Angeles Lakers fans and hope.
But Lori Queen, who’s in charge of small cars for General Motors Corp., believes the automaker’s latest little entry — the Chevrolet Cobalt — has what it takes to overcome high incentives and low prices to help the automaker eke out profits from its small car lineup.
The Chevrolet Cobalt arrives in the fall and replaces the aging Cavalier in Chevy’s lineup. It will be more expensive and more expansive, available in both a sedan and coupe that have little in common aesthetically, including completely different rear ends.
But where the Cavalier’s price range reaches far down market in an effort to grab entry-level buyers, the Cobalt is being postioned a rung higher, leaving the Korean-made Aveo to occupy Chevy’s bargain basement.
“The Aveo will take a lot of the pressure from the low end,” Queen said. “The Cobalt picks up right in the middle, where the heart of the market is, and can go all the way up to compete with the (Volkswagen) Jettas and premium side of the small car market.”
Queen won’t reveal sales targets or exact pricing for the Cobalt, but she predicts it will sell at least as well or better than the Cavalier. Through May, Chevy had sold 84,755 Cavaliers, down 10 percent from the first five months of 2003, according to Autodata Corp.
With a higher price point, Queen believes Cobalt will appeal to budget buyers with more upscale tastes who “wouldn’t have normally bought a Cavalier.”
Ann Asensio, GM’s director of advanced vehicles, says the upgrades in small car design seen in the Cobalt are a sign the automaker is taking small cars much more seriously.
“What you’re seeing here is a small revolution of seeing real attention to customer needs — especially women,” Asensio said in an interview last week. “They don’t want to give up any of the things they want.” That includes more refined interior and exterior styling and safety, Asensio said.
But with the profit-eating incentives that will inevitably be offered on the Cobalt, and high corporate structural costs, GM faces the same tough challenge as its domestic rivals in trying to make money on small cars.
It’s not impossible, says Ron Harbour, president of Troy-based Harbour Consulting, which publishes a widely-read annual report on auto plant productivity and efficiency.
“Right now, on the typical (Ford) Focus or Cavalier, the companies are losing $1,000 to $2,000 for every car they build,” Harbour said. “You’ve got to get the price up and costs down on the small cars to have a chance.”
Queen says Cobalt is up for the challenge, in large part because it does not reach down, price-wise, as low as Cavalier.
For the entire article and picture link:
http://www.detnews.com/2004/autosinsider/0.../b01-183847.htm
New model seeks to turn tide of losses
Ed Garsten / Charles V. Tines
The Detroit News
STERLING HEIGHTS — Small cars and big profits are two ideas that go together about as well as Los Angeles Lakers fans and hope.
But Lori Queen, who’s in charge of small cars for General Motors Corp., believes the automaker’s latest little entry — the Chevrolet Cobalt — has what it takes to overcome high incentives and low prices to help the automaker eke out profits from its small car lineup.
The Chevrolet Cobalt arrives in the fall and replaces the aging Cavalier in Chevy’s lineup. It will be more expensive and more expansive, available in both a sedan and coupe that have little in common aesthetically, including completely different rear ends.
But where the Cavalier’s price range reaches far down market in an effort to grab entry-level buyers, the Cobalt is being postioned a rung higher, leaving the Korean-made Aveo to occupy Chevy’s bargain basement.
“The Aveo will take a lot of the pressure from the low end,” Queen said. “The Cobalt picks up right in the middle, where the heart of the market is, and can go all the way up to compete with the (Volkswagen) Jettas and premium side of the small car market.”
Queen won’t reveal sales targets or exact pricing for the Cobalt, but she predicts it will sell at least as well or better than the Cavalier. Through May, Chevy had sold 84,755 Cavaliers, down 10 percent from the first five months of 2003, according to Autodata Corp.
With a higher price point, Queen believes Cobalt will appeal to budget buyers with more upscale tastes who “wouldn’t have normally bought a Cavalier.”
Ann Asensio, GM’s director of advanced vehicles, says the upgrades in small car design seen in the Cobalt are a sign the automaker is taking small cars much more seriously.
“What you’re seeing here is a small revolution of seeing real attention to customer needs — especially women,” Asensio said in an interview last week. “They don’t want to give up any of the things they want.” That includes more refined interior and exterior styling and safety, Asensio said.
But with the profit-eating incentives that will inevitably be offered on the Cobalt, and high corporate structural costs, GM faces the same tough challenge as its domestic rivals in trying to make money on small cars.
It’s not impossible, says Ron Harbour, president of Troy-based Harbour Consulting, which publishes a widely-read annual report on auto plant productivity and efficiency.
“Right now, on the typical (Ford) Focus or Cavalier, the companies are losing $1,000 to $2,000 for every car they build,” Harbour said. “You’ve got to get the price up and costs down on the small cars to have a chance.”
Queen says Cobalt is up for the challenge, in large part because it does not reach down, price-wise, as low as Cavalier.
For the entire article and picture link:
http://www.detnews.com/2004/autosinsider/0.../b01-183847.htm
