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GM will target young families, not entry-level buyers, with Lordstown-built Chevrolet Cruze

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GM will target young families, not entry-level buyers, with Lordstown-built Chevrolet Cruze

By Robert Schoenberger, The Plain Dealer December 17, 2009, 2:45PM

2011 Chevrolet Cruze prepares to become GM's global small car: Edmonds Inside LineDETROIT -- General Motors won't be marketing the new Chevrolet Cruze compact car as a replacement for the Cobalt.

The Cobalt, an economy vehicle with a lower starting price than its better-equipped peers in the compact market, appeals mainly to bargain shoppers.

With the Cruze, which goes into production in Lordstown next year, GM will target young families -- buyers who will pay more for a vehicle that has more space, better fuel economy and more premium features than the Cobalt.

"It will be a very different vehicle from the rest of the compact segment," Chevrolet General Manager Jim Campbell said in an interview this week.

To appeal to buyers in their mid-to-late 20s, GM will offer a version of the Cruze with leather seating. High-tech stereos with USB connectors for iPods are standard and Bluetooth connections for cell phones are available.

With the Cobalt, the company tried to play up sporty looks. With the Cruze, GM is talking about 10 standard airbags, five-star crash-test ratings and 40 miles per gallon fuel efficiency.

Aaron Bragman, an analyst with research and consulting firm IHS Global Insight in suburban Detroit, said GM appears to be migrating the Cruze out of the compact car's traditional economy role and moving it closer to what Americans expect out of mid-sized sedans.

The automaker can do that because within the next few years it also plans to launch an upgraded version of the Chevrolet Aveo subcompact and to introduce the Chevrolet Spark, which will be even smaller than the Aveo. With those two smaller cars in the lineup, GM will continue to have offerings for budget buyers, giving it the opportunity to raise prices on compact cars.

"They're getting more expensive because you have more models coming in behind at those lower price points," Bragman said.

GM officials said they haven't yet set a price for the Cruze, but the sticker should be about what it was for the Cobalt. The difference is that the company does not expect to offer cash-back discounts on the Cruze. Most Cobalts sold for $1,500 to $2,000 less than their sticker prices.

"There's no future in incentivizing your vehicles," said Mike Simcoe, the Australian GM executive recently brought to Michigan to run Chevrolet's design department. "We're trying to take the Chevrolet brand and make it more aspirational. You do that with design, not pricing."

Simcoe said the Cruze was designed to be a half-size larger than the Cobalt -- a vehicle not quite as large as the mid-sized Malibu, but close enough that many families could use it regularly without feeling cramped.

Simcoe said he's not concerned about trying to persuade Americans that a compact car can serve in a role once reserved for larger vehicles.

"The design will convince them," he said. "All they have to do is sit in it and feel the space, and they'll know it's big enough."

The automotive press and industry watchers can get tied up with the concepts of which car should perform in which class, said Ed Welburn, GM's global director of design. Customers don't pay as much attention.

"People will buy the car they find appealing, not the label of compact or mid-sized," Welburn said. "It's about the car, not the label."

Still, pitching the car as a somewhat premium family car instead of a budget compact car could be challenging. GM is planning a comprehensive advertising campaign for the vehicle closer to when it launches in the late summer or early fall, said Margaret Brooks, marketing brand manager for the Cruze.

link:

http://www.cleveland.com/business/index.ssf/2009/12/gm_will_target_young_families.html

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I'm assuming this is the reason that the next Aveo will be roughly the size of the Cobalt and come with a RS package/more agressive looks.

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Sounds reasonable...if the Cruze is a little bit bigger than the Cobalt, the Aveo grows a little, and the Spark slots in at the bottom, then the next Malibu can be slightly smaller as reported, and there would be room for the next Impala w/o causing too much conflict.

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All I have to say is good luck with that. Cobalt buyers are really cheap, models that sell around me are either 5spd 1LS XFE Coupes or 1LT automatic sedans and the like, not premium models with leather and XM radio. (Folks want the cars for 12-13K not 18-19K) The only premium model people actually buy around here is the turbocharged SS. I bet this is going to be hard sell unless it is significantly bigger than the out-going Cobalt and sized more like the N-Body Malibu than the Cobalt. If it gets pricy enough people will say screw this and just get a Malibu, with a big trunk nice sized back seat and 33mpg. You can have a 2LT Malibu with no options for about 26K sticker with lots of features and 33mpg. *I know I'd get the Malibu* I just don't think this is going to work out well. Having said that this is a car that I have zero interest in, another boring small, prolly slow car, that people will pay too much for. I do hope for GM's sake it sells well, and 40mpg is going to be a HUGE help, but I wouldn't count on LTZ or even LT models being the top sellers. The Cruze is nice looking and I understand GM wants more premium buyers, but until the new Aveo and Spark come out the Cruze will be expected to be the Cobalt, and from the sounds of it won't be priced like one, and people will go buy a Kia or something. I just don't think GM can do this, and to be honest they never have done a small car right.

Edited by gm4life
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This is great; my parents were seriously impressed with the Cruze at LAIAS, and seem to be debating between it, the Buick iteration, a Malibu, and LaCrosse/Regal if they decide to purchase a car for their vacation condo in California.

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All I have to say is good luck with that. Cobalt buyers are really cheap, models that sell around me are either 5spd 1LS XFE Coupes or 1LT automatic sedans and the like, not premium models with leather and XM radio. (Folks want the cars for 12-13K not 18-19K) The only premium model people actually buy around here is the turbocharged SS. I bet this is going to be hard sell unless it is significantly bigger than the out-going Cobalt and sized more like the N-Body Malibu than the Cobalt. If it gets pricy enough people will say screw this and just get a Malibu, with a big trunk nice sized back seat and 33mpg. You can have a 2LT Malibu with no options for about 26K sticker with lots of features and 33mpg. *I know I'd get the Malibu* I just don't think this is going to work out well. Having said that this is a car that I have zero interest in, another boring small, prolly slow car, that people will pay too much for. I do hope for GM's sake it sells well, and 40mpg is going to be a HUGE help, but I wouldn't count on LTZ or even LT models being the top sellers. The Cruze is nice looking and I understand GM wants more premium buyers, but until the new Aveo and Spark come out the Cruze will be expected to be the Cobalt, and from the sounds of it won't be priced like one, and people will go buy a Kia or something. I just don't think GM can do this, and to be honest they never have done a small car right.

GM cars are competitively priced with the competition now, instead of being bottom-feeding price-leaders. If someone cannot afford the Cruze, there will be plenty of used Cobalts to choose from.

GM is in the business of making money; selling Cobalts so poorly-equipped and cheaply still led to incentives, and GM didn't make nearly enough money on the Deltas. If GM sells better-equipped Cruzes, not only will consumer perception improve, leading to more sales, but GM's profit margins increase as well. Win/win. GM needs people to WANT to own their cars, not just because they offer the best deal. If your dealerships are offering the best deal, it's because your cars aren't selling themselves.

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GM cars are competitively priced with the competition now, instead of being bottom-feeding price-leaders. If someone cannot afford the Cruze, there will be plenty of used Cobalts to choose from.

GM is in the business of making money; selling Cobalts so poorly-equipped and cheaply still led to incentives, and GM didn't make nearly enough money on the Deltas. If GM sells better-equipped Cruzes, not only will consumer perception improve, leading to more sales, but GM's profit margins increase as well. Win/win. GM needs people to WANT to own their cars, not just because they offer the best deal. If your dealerships are offering the best deal, it's because your cars aren't selling themselves.

I hope what you say is right, but in this segment one that GM has failed time and time again, I don't see it happening especially without the new lower end models (Spark and Aveo) under the Cruze. That means for now the Cruze will have to be the Cobalt replacement until the new Aveo comes in moves upmarket and the Spark takes its place. I would love for what you say to actually happen, I am just being honest with what I think will happen. I predict the up-level LTZ and LT trims will sell well at the start and then the volume seller will be the low end stripper models in 1LS trim just like the Cobalt. Even if it is a nicer and larger car over-all, it still is four cylinder only and the most powerful one will be what 140ish hp?

Edited by gm4life
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Sounds like the Civic sedan is the main target of the Cruze...appeals to wide range of buyers, many are well equipped. I wonder what the typical transaction price range for the Civic sedan is.

The Aveo and Spark will target the entry-level buyers, I would think.

Edited by Cubical-aka-Moltar
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Sounds like the Civic sedan is the main target of the Cruze...appeals to wide range of buyers, many are well equipped. I wonder what the typical transaction price range for the Civic sedan is.

The Aveo and Spark will target the entry-level buyers, I would think.

That's what I've been saying....(yet Satty called me nuts)

There are going to be a whole bunch of compact buyers with money coming very soon....

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GM cars are competitively priced with the competition now, instead of being bottom-feeding price-leaders. If someone cannot afford the Cruze, there will be plenty of used Cobalts to choose from.

GM is in the business of making money; selling Cobalts so poorly-equipped and cheaply still led to incentives, and GM didn't make nearly enough money on the Deltas. If GM sells better-equipped Cruzes, not only will consumer perception improve, leading to more sales, but GM's profit margins increase as well. Win/win. GM needs people to WANT to own their cars, not just because they offer the best deal. If your dealerships are offering the best deal, it's because your cars aren't selling themselves.

AMEN!

Thanks for saying it before I could.....

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I'm assuming this is the reason that the next Aveo will be roughly the size of the Cobalt and come with a RS package/more agressive looks.

Yes, and maybe.....just don't count on that part...

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AMEN!

Thanks for saying it before I could.....

I hope you guys are right but I just don't see it happening unless and until the new Aveo and Spark come to take the Cobalt and Aveo's spots. Even after that, I see it having lower sales because of the higher price and lots of people jumping into Malibu's or down to the much cheaper Aveo.

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I hope you guys are right but I just don't see it happening unless and until the new Aveo and Spark come to take the Cobalt and Aveo's spots. Even after that, I see it having lower sales because of the higher price and lots of people jumping into Malibu's or down to the much cheaper Aveo.

GM has to get past the Wal-Mart 'low prices every day' thinking...leave the really cheap compacts to Kia, focus on the quality, high volume end of the market, where the Civic lies.

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Anyone getting "Cruze fatigue" yet. I mean, the car's going to be two years old by the time the first one gets sold here.

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GM has to get past the Wal-Mart 'low prices every day' thinking...leave the really cheap compacts to Kia, focus on the quality, high volume end of the market, where the Civic lies.

I understand but will it sell at the higher prices?

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Anyone getting "Cruze fatigue" yet. I mean, the car's going to be two years old by the time the first one gets sold here.

I have it. By the time it comes out the Volt will make it appear dated... I almost feel like GM should skip the Cruze and just make a gas version of the Volt called the Cruze.

NA is the biggest car market... this is were new cars should drop FIRST.

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I hope what you say is right, but in this segment one that GM has failed time and time again, I don't see it happening especially without the new lower end models (Spark and Aveo) under the Cruze. That means for now the Cruze will have to be the Cobalt replacement until the new Aveo comes in moves upmarket and the Spark takes its place. I would love for what you say to actually happen, I am just being honest with what I think will happen. I predict the up-level LTZ and LT trims will sell well at the start and then the volume seller will be the low end stripper models in 1LS trim just like the Cobalt. Even if it is a nicer and larger car over-all, it still is four cylinder only and the most powerful one will be what 140ish hp?

Why be a concern troll?

What I just explained to you is what the article said, which confirmed rampant speculation on GM's future products. GM is no longer targeting budget buyers. Budget buyers aren't interested in option packages, or anything that involves a profit margin.

Sure, strippers may sell, but when they barely break even or sell for a loss, they don't do GM any good, now do they? By being more aspirational, GM can increase profit margins, which is how a company makes money and stays in business.

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Anyone getting "Cruze fatigue" yet. I mean, the car's going to be two years old by the time the first one gets sold here.

It's two years old to 'us' but to 98.99999999995% of the North American population, it's new.

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when i was growing up, real family cars were cars like the 98, the park avenue, the electra, lesabre, 88.

cars with substance and longevity.

i see now they are conditioning us to reduce our expectations of an acceptable family car to a compact class 1.4 litre semi-Korean crackerbox.

Edited by regfootball
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when i was growing up, real family cars were cars like the 98, the park avenue, the electra, lesabre, 88.

cars with substance and longevity.

i see now they are conditioning us to reduce our expectations of an acceptable family car to a compact class 1.4 litre semi-Korean crackerbox.

Times change. It's not 1975 or 1985 anymore. I remember family cars from when I was a kid were usually full size, and often wagons w/ plood on the sides. I do remember over the course of the 20 years my Dad's main car going from having a 460 to a 351 to a 302 to a 4.6 and loosing a foot or so of length and maybe 1000lbs of weight... :)

Of course, in the mid to late '80s, family cars started becoming minivans then in the '90s SUVs and...

Edited by Cubical-aka-Moltar
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Why be a concern troll?

What I just explained to you is what the article said, which confirmed rampant speculation on GM's future products. GM is no longer targeting budget buyers. Budget buyers aren't interested in option packages, or anything that involves a profit margin.

Sure, strippers may sell, but when they barely break even or sell for a loss, they don't do GM any good, now do they? By being more aspirational, GM can increase profit margins, which is how a company makes money and stays in business.

Concern troll? Come on Croc, I am simply saying that I think for GM this will be hard, and hope they can pull it off. This will be especially hard without the new Aveo and Spark under it. (For the first year or so...)

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when i was growing up, real family cars were cars like the 98, the park avenue, the electra, lesabre, 88.

cars with substance and longevity.

i see now they are conditioning us to reduce our expectations of an acceptable family car to a compact class 1.4 litre semi-Korean crackerbox.

Which is sad.

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The only buyers GM will loser are the losers who have become obsessed with "the deal" and frankly they dont do a damn thing for GM's bottom line, so to hell with them I say. Nobody is doing GM a favor when they wait for 27% of sticker in rebates then negotiate another 14% off.

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Concern troll? Come on Croc, I am simply saying that I think for GM this will be hard, and hope they can pull it off. This will be especially hard without the new Aveo and Spark under it. (For the first year or so...)

Why? Why on earth would it be "hard" for GM with the Cruze? Let's see here...CTS, Malibu, Equinox, Enclave, Lacrosse, Camaro...this formula has worked for all of these cars, why would it even be difficult for Cruze? Honda does it with Civic; why wouldn't it work for Cruze? If you think it will be "hard" for GM, then say something more substantial than that--give some reasons or something to back up what you're concerned about. That said, harping on "value customers" is weak sauce--those customers are only GM customers because Hyundai, Toyota, Nissan, Honda, etc. didn't offer a better deal the week they bought. There's no brand value to them, no loyalty, no customer equity. And with such el cheapo sales, THEY DON'T MATTER as customers because they don't make GM any money.

Let's explain this in some super basic terms, one last attempt:

GM can offer a stripper Cobalt that has a low MSRP and offers GM $2,000 in profit margins. GM offers an incentive of $1,000 off because they don't sell. GM now sells 80,000 and makes a paltry $80,000 on those cars.

Now GM offers a Cruze, the base model having a higher MSRP than the base Cobalt, but also having more features standard. Because of the premium amenities, GM prices this cheap Cruze $5,000 higher, with a profit margin of $6,000 due to the extra cost per car for those better materials and increased number of standard features. The car has stylish exterior and nice interior, but it's more expensive. Only 14,000 sell initially, but GM has made more than $80,000 in profits than it did selling 80,000 units.

The only buyers GM will loser are the losers who have become obsessed with "the deal" and frankly they dont do a damn thing for GM's bottom line, so to hell with them I say. Nobody is doing GM a favor when they wait for 27% of sticker in rebates then negotiate another 14% off.

Bingo.

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dana-carvey-grumpy1.jpg

In my day, we had big cars - cars that got four miles to the gallon. And we didn't bother with those fancy-schmancy seat belts or crumple zones or survivable accidents. We had push-button radios and we had to tune our own carburetors before crank-starting the engine. We watched the speedometer slowly bounce its way to the 55-MPH speed limit and we liked it!

FTFY.

Seriously, times change. Honda has sold 237,403 Civics through November of this year in a horrible economy - they sold 321,987 Civics from Jan-Nov of '08. This is what people want. Today's family is more likely to want a smaller vehicle with more stuff in it than a larger stripper.

I understand it's not your cup of tea, but GM is smart to give the masses something most of them will aspire to own.

-RBB

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