Chevrolet takes Cruze into small car market
Monday, June 21, 2010 at 11:23AM Carmaker hopes to break small car jinx which began with the Corvair
General Motors is hoping to leave past failures behind as it launches the Cruze, which it hopes will be a small car with big success.
A Chevrolet Cruze pre-production model is shown in Milford, Mich. With the Chevrolet Cruze, General Motors is on the verge of building its first competitive small car. (Paul Sancya/Associated Press)
The company, which has a past littered with compact wrecks like the unsafe Corvair and rusty Vega, will 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, a dated, noisy, design with a chintzy hard-plastic interior that doesn't perform as well as competitors.
Americans bought just 105,000 last year, compared with about three times as many Toyota Corollas.
A history of small car misses
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. labour costs and American drivers' hunger for larger vehicles fuelled by cheap gas.
"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 with a reporter 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 per cent of the U.S. market five years ago to 33 per cent now. J.D. Power & Associates predicts that will rise to 35 per cent by 2013. And small cars are even more important overseas.
Yet GM drew only eight per cent of its U.S. sales from small cars last year, compared with more than 20 per cent for Toyota and Honda.
When the Cobalt was in development in the early 2000s, GM set out just to make it competitive, not a market leader, said Wayne McConnell, a GM engineer in charge of vehicle performance. Ambitious sales targets and plans to attract new buyers were changed after cost estimates were tallied.
Customers noticed, bypassing Chevrolet for Corollas and Civics.
A small difference between mediocre and great
Yet engineers say the new GM leadership has figured out that there's only a small cost difference between mediocre and great. Now they can spend a little more to make a car better, as long as they work with parts companies to control costs. The new management, they said, has learned from recent new models that people will pay a little more for quality.
In the past, the early-generation Cruze might have made it to showrooms, but it was held up last fall by managers unhappy with its performance. Production was delayed from April to August.
Mark Reuss, GM's North American president and former head of engineering, said the six-speed automatic transmission constantly shifted. The tires were noisy, and there was a troubling lag between when the driver stepped on the gas and response from the 1.4-litre turbocharged engine.
The transmission was redone, the turbo fixed and noises quelled. Reuss now calls the engine and transmission "brilliant," balancing trade-offs between fuel economy and performance. A Cruze Eco version is expected to get 5.9 L/100 km on the highway.
"They're really working hard at quality," Consumer Reports' Champion said. "But it's like moving the Titanic."
Champion, who drove an early Cruze, said it handled well, looked nice and had a high-quality interior.
"I thought it was an impressive vehicle," he said.
GM won't reveal sales expectations for the Cruze, but it has to beat the Cobalt. There's room for growth. Toyota sold nearly 297,000 of its Corolla/Matrix model last year.
Tom Stephens, GM head of product development, said the company has tried to make sure the Cruze is better than Corolla or Civic.
"They've got quite a gap that they've got to close just to be competitive, let alone get ahead," he said.
Canadian pricing for the Cruze hasn't been announced yet, said GM Canada spokesman Tony Laroque.
Source: CBC News
Read more: http://www.cbc.ca/consumer/story/2010/06/21/con-chev-cruze.html?ref=rss#ixzz0rV9cK28g
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