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GM takes gamble on compact Cruze

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GM takes gamble on compact Cruze

Automaker 'can't afford' a misstep, analyst observes

BY TOM KRISHER

ASSOCIATED PRESS

General Motors thinks it can finally sell a good small car.

The company, which has a past littered with compact wrecks like the unsafe Corvair and rusty Vega, plans to roll out the Chevrolet Cruze in September -- betting it can attract younger drivers and succeed in the most competitive segment of the worldwide auto market.

GM owners may know that "nothing works like a Chevy truck," but the little Cruze is a big gamble.

"They can't afford to get it wrong," said Michael Robinet, an automotive analyst with CSM Worldwide in Michigan.

The Cruze follows another GM small-car flop, the Chevy Cobalt, which failed because it looks dated, is noisy, has a chintzy hard-plastic interior and doesn't perform as well as competitors. Americans bought just 105,000 last year, compared with about three times as many Toyota Corollas.

GM must also overcome history. Dating to the Corvair in the 1960s, its executives viewed small cars as money-losers because of low prices, high U.S. labor costs and American drivers' hunger for cheap gas and larger vehicles.

"They really haven't spent any time or money on these vehicles," said David Champion, senior director of Consumer Reports' auto testing department. The Cobalt, introduced in 2004, "came out trying to be competitive in that market but always languished behind."

That has to change if the Cruze is to help save GM.

Champion said the car must be as reliable as the Corolla or Honda Civic, the top-selling U.S. compacts. But dependability has been a problem. Consumer Reports gave its coveted Recommended Buy rating to only seven of 30 GM models in its April issue, mainly because of spotty reliability. No GM small cars got the label.

Last month, on the final drive to check for problems before full-scale Cruze production starts, GM engineers were candid about past compacts, saying they were mediocre because GM put controlling costs before all else.

As a result, GM missed the small-car boom last decade. Compacts and subcompacts grew from 21% of the U.S. market five years ago to 33% now. J.D. Power & Associates predicts that will rise to 35% by 2013. And small cars are even bigger overseas.

link:

http://www.freep.com/article/20100622/BUSINESS01/6220311/1331/GM-takes-gamble-on-compact-Cruze

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