To Grow, GM Tries to Make Small Cars Cool

Automaker Looks to Find Niche in Market it Long Ignored

(CNET)  This story was written by CNET's Martin LaMonica

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For all the attention on the electric Chevy Volt, General Motors has big expectations for another key car segment: small cars.

The auto giant opened up its design studios and testing grounds to the media on Tuesday to showcase its product pipeline of 25 new models over the coming two years. Having dramatically cut costs, its turnaround now rides on its ability to sell new cars.

Certainly, GM will continue to sell SUVs, trucks, and large sedans--highly profitable product categories that flourished when gasoline was cheaper than now. But GM's designers have sharpened their focus on smaller fuel-efficient cars and crossovers, betting that rising gasoline prices are inevitable.

"The days when we did a great Silverado (pickup truck) and did an adequate small car--over. We can't do that as a company," CEO Fritz Henderson said during a press conference on Tuesday. "If we do (small cars) well, I think we'll reopen ourselves to a market that frankly we haven't done as well as we should."

The smaller cars--none would qualify as a tiny, two-seater--will help the company meet fleet mileage mandates and help GM better compete on fuel efficiency, company executives and analysts said.

But GM's vice president of global design, Ed Welburn, made clear that the goal isn't just to turn out "econoboxes" that post good mileage ratings.

"Cool and small is the next big thing," said Welburn said. "Small cars have been done before but it was always like, 'I can't afford big so I have this.' I believe small cars can be cool."

Higher gasoline prices

During a tour of GM's design studios on Tuesday, company executives showed the compact cars and smaller crossovers in its pipeline. Later this year, GM will release the Chevrolet Cruze, a four-door compact, and introduce a two-door compact, the Chevy Spark, in 2012.

Although the Chevrolet entry-level brand will tend to have most of its compacts, even its higher-end brands--Buick, GMC, and Cadillac--will introduce or are exploring smaller models.

On Tuesday, Welburn took the wraps off an entry-level Cadillac. Even designers at its GMC brand, known for its giant SUVs and trucks, have created a model of a compact, which roughly resembles a Nissan Cube.

Meanwhile, its Buick lineup will feature a smaller crossover, a new compact sedan, and a plug-in hybrid crossover, which will all be available over the next two years.

GM has been able to get substantially better fuel efficiency on its large vehicles, too, noted Dennis Virag, the president of Automotive Consulting Group in Ann Arbor, Mich. The Chevy Equinox, for example, gets about 32 miles per gallon while most SUVs get about 20 or 22, he said.

"The whole trend in the industry is towards smaller and fuel-efficient vehicles but the consumer still wants the amenities," Virag said.

Henderson said that GM is seeking to meet or exceed the industry benchmark on fuel efficiency not only to meet government mandates but to appeal to consumers who expect gasoline prices to continue going up.

"Our fundamental premise of planning for higher gas prices is the right premise," he said.

[MPHgrad]

As usual, GM is decades late and $10 billion short. Seriously?? The Japanese defined and capitalized on the small car niche some time ago.

[formrusmcsgt]

The best analogy I can offer to GM's situation is to compare it to a housewife who, over the years, becomes complacent about her appearance.

Once dumped, she's in the gym 7 days a week....

[MPHgrad]

This is a good one formrusmcsgt!

You are going to anger some housewives who insanely believe that they should be loved and cherished regardless of their appearance.

[formrusmcsgt]

Thank you. If they loved and cherished their husbands, they wouldn't expect him to live with a hog.

[zonkzilla]

"Styling may be the only way to cut back into the small car market they gave to the Japanese in the 70's. It will be an uphill battle, however a real focus on looks might just work. The Japanese product lacks in that area."

You said it bro. All small cars look the same and you cannot tell them apart. I wouldn't mind so much if they all didn't have that stupid so called futuristic Japanese "cartoon" design with all those slopes, fake chrome, points, and angles.
One word - UGLY.
The only small car that is really different is the Mini Cooper and that is a copy of a 60's car.
The only modern small cars I can stand to look at are the Volkswagen models.

[Hosheen]

I have to wonder what GM is doing? Are they playing a shell game or are they just stupid?

Here in Brazil, GM makes a wide range of small cars under the Chevrolet and GM brand names. Is the US division somehow unaware of that or are they just planning to start building them for the US market and announce them as great products of the "new" GM?

The cars built here (I have a Chevrolet Corsa) are of good quality and reliability. They are not built for the US long drives at high speeds market, but they do survive on the roads here so the basic designs must be good as is the quality of the construction. With only simple changes in engine and gearing, most of these would do well in any market. Even better, they all come with flex-fuel engines. This means the run on gasoline, alcohol, or any combination of the two. Here. all gasoline is 25% alcohol, so this is really not a big surprise.

[brianbwb-2009]

"The whole trend in the industry is towards smaller and fuel-efficient vehicles but the consumer still wants the amenities," Virag said."

So still GM makes the stupid mistake of wanting impossible profit margins for useless "amenities', assuming they know better than the consumer, what the consumer "wants".

It is not about what the consumer wants, it is about what the consumer can afford.

The idiots should make a basic affordable car, in a modular fashion that allows amenities to be added later, as and if wished.

And by affordable, I mean by the national average salary standards, not just the rich, It should not take longer than the life of the car to pay for it.

But it seems that this dog wants to die, so let it.

[tmittelstaed]

All of the automakers make basic affordable cars that allow for modular amenities. The problem is that none of the dealers want to stock these cars on their lots, because people will come in, see the basic car, then the basic car with an amenity like air conditioning, then compare the difference in lease payments which is negligible, and buy the car with A/C.

If people saved up money then when they had the money saved, went and bought a new car, then the basic car idea would work. But they don't do that. So much of the new car sales process is a direct appeal to vanity and emotions, and how do you tell someone that they are special and deserve a new car, then tell them that they only deserve the most basic model? What sells new cars is making people feel like they deserve the best things in life and deserve the best car they can possibly afford.

If your immune to emotion you can still walk into a car dealership, plunk down your cash, and have the dealership special-order the basic model from the factory. But people practical enough to do this are usually practical enough to buy a 1 or 2 year old low mile used car and let someone else take the depreciation hit.

[sjc_1]

GM has had this small car in the works for a while. There are too many auto makers with too many models. They should all do what they do best and not waste their time on losing bets. GM could have made a good small car years ago, but chose to make SUVs with higher profit margins.

[CyCarConsulting]

Styling may be the only way to cut back into the small car market they gave to the Japanese in the 70's. It will be an uphill battle, however a real focus on looks might just work. The Japanese product lacks in that area. Obviously we don't want to talk about reliability. If that hasn't been addressed already, don't bother with the hoopla, and the sizzle.

[incog-nito]

"The Japanese product lacks in that area."

Really? The styling of the GM car in the picture look rather derivative and not exactly original. One of the many reasons the Big 3 are hurting is because their styling are dated and do not appeal to the younger crowd. Honda has the Fit, Toyota has the Scion models, and Nissan the Cube. Detroit? The PT Cruiser, The Chevy HHR, and a host of other throwbacks and nostalgia vehicles and muscle cars. No wonder they're losing market share with younger people.

[tmittelstaed]

They are losing share to the young people because the pricing of the domestic product is not competitive with the cheap small car imports - and I'm not talking about the Toyota Corolla, either.

Most young people would get a larger domestic car in a split-second if it was priced the same as the small cheap import, styling be dammed.