Quick GM News Roundup

By Brendan Moore

09.16.2008

There are several things happening over at GM at once; none of them earth shattering, but they all deserve mention.

Here’s what was announced yesterday:

The company said that there would not be another extension of the employee pricing program when it ends this month. GM originally announced the offer on August 19th, extended it until the end of September when it starting producing results, and there was some speculation that the company was considering extending it yet again. But Chevrolet General Manager Ed Peper put that speculation to rest when he stated the GM was happy with the results of the promotion and it would end on the last day of the month.

GM had an okay month in August compared to almost everyone else – results were way behind (20% under) last year’s August results, but that was a lot better than Ford and Chrysler were able to do. The Chevrolet Silverado was also able to grab the No 1 – selling vehicle crown away from the Toyota Camry in August.

Surprising almost no one, GM also announced that Cadillac would add a CTS Sport Wagon model next year. The five-passenger wagon is to be built on the same platform as the Cadillac CTS sport sedan but will provide 25 cubic feet of cargo space behind the rear seats. It’s fuel efficiency is expected to be similar to the sport sedan’s 26 mpg on the highway, GM said. Since the stunning 2010 CTS Coupe will also make its appearance in 2009 calendar year, Fall should be a heady time at your Cadillac dealer’s, what with three CTS bodystyles available.

The company released a statement detailing plans to produce 70,000 more Chevrolet Cobalts in 2009 in order to meet demand. It is not believed that GM is actually making money on the Cobalt, but demand for small cars has really spiked upward since gasoline hit $4 a gallon in the U.S. earlier in the year, and it doesn’t seem to be abating. So, profitable or not, GM is producing what people are buying – small cars. But its got to be killing the executives at GM to make greater volumes of a car that they can’t charge a whole of money for.

Last month, buyers paid an average of $16,455 USD for every Cobalt that went across the curb at a Chevrolet dealership, but the Cobalt’s Japanese competitors commanded a much higher average sales price. Honda got an average $19,184 for a Civic, while Toyota customers paid an average of $18,232 per Corolla, according to Edmunds.com.

GM has already sold 145,941 Cobalts this year just through August, which is a 10% increase over last year’s total, and they could have sold more if only dealers had more Cobalt inventory. The Cobalt XFE, a version of the Cobalt that is particularly miserly with gasoline, is in very short supply.

Last, but not least, GM talked yesterday about the Cruze, which is the Cobalt’s replacement and will show up as 2010 model. GM believes it will be able to get a higher price for the Cruze than Honda and Toyota are getting for their sub-compacts, the Civic and the Corolla, respectively. The Cruze is larger outside, larger inside, has comparable or better interior features, and will get 40 mpg, which handily beats both cars in fuel economy. It is also a more attractive car. To bolster the belief that the Cruze will command a much higher price than the Cobalt it replaces, the aforementioned Peper pointed to the fact that the redesigned Chevrolet Malibu now sells for an average $4200 over the old Malibu’s average selling price.

“Value and price are offshoots of what consumers think about them, what they’re willing to pay for the products,” Peper commented. “It’s obviously in our best interest if people think more of our products, the more the value that we provide.”

GM can only hope that Cruze does as well as the new Malibu has; if it does, then they will sell a bunch of them, and realize profits in their small car segment as well. If the Cruze doesn’t emulate its Malibu big brother, GM might have a small disaster on its hands.

COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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5 Comments

  1. If the new Chev Cruze is anything like my Malibu it will be a real hit. My 4 cyl Malibu is getting 22.3 mpg in the city. My friends Accord is getting 17.9 and he is not real happy when I bring it up.

  2. Regarding Malibu transaction prices, it’s great that the current car sells for more than the old Malibu, but I think a useful comparison would be current Malibu versus current Impala. As Malibu sales have risen, Impala sales have dropped, suggesting buyers may be choosing the better car for the same money or less.

  3. Let’s hope then the Cruze will be successeful. I wonder if Canadian Pontiac dealers will have a Cruze counterpart to sell in the Great White North? I would had keep the Cobalt name for a basic version of the Cruze. In a role similar to what the Biscayne did as a cheaper series of the Bel Air/Impala/Caprice. Or recycle the nameplate for a model below the Cruze (and who could replace the Canada-only model, the Optra aka Suzuki Forenza or another Canada-only model, the Epica aka Suzuki Verona who’ll be replaced with the upcoming Suzuki Kizashi http://news.caradisiac.com/Future-Suzuki-Kizashi-le-dessin-brevete-653

    And to add more salt on the table, the smaller RWD Cadillac based on the future Alpha platform is a go according to this article from Motor Trend
    http://www.motortrend.com/future/future_vehicles/112_0811_alpha_platform_cadillac_confirmed/index.html

  4. The Crize is huge, and I mean HUGE, improvement over the Cobalt in looks.

    If the interior is better by the same amount, they’ll have a hit with it.

  5. The Cadillac Sport Wagon isn’t going to do much, but OMG, that CTS Coupe is so chill its iceeeeee. I’m hoping to put one of those in my driveway.

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