Déjà vu for GM: 2008 Chevy Malibu
Will the new Malibu conquer the Japanese? Past history isn't encouraging, argues Fortune's Alex Taylor III.
NEW YORK (Fortune) -- It's 2006 and the new midsize car from General Motors arrives on the market with tremendous fanfare. Built on GM's global Epsilon platform, it is specifically designed as an import fighter, aimed at knocking Toyota (Charts) and Camry off their perch. With stylish new sheet metal and a slick interior, it is billed as GM's best new passenger car in years. Reviewers are effusive in their praise; one raves: "The sedan is so overwhelmingly good it's a welcome check to import stalwarts from Honda (Charts) to Hyundai."
That was the 2007 Saturn Aura that was launched in August 2006 and almost promptly disappeared from sight. Despite its notices, and election by a journalist group as the North American car of the year, it has been an enormous disappointment. Instead of the 90,000 units a year that Saturn expected to move, it is selling at a rate of about half that. "Aura was a huge missed opportunity," says one competitor.
Another year, and another midsize car is getting a huge sendoff from GM (Charts, Fortune 500). This time it is the 2008 Chevy Malibu, also built on the Epsilon platform, also boasting an upgraded design, and also hoping to steal sales from the Japanese.
"We think we've built the best midsize sedan in the world," Chevrolet general manager Ed Peper told the International Motor Press Association in New York this week. "We've got the car to beat Accord, Camry, and [Nissan] Altima."
For those keeping score at home, Peper didn't offer any benchmarks to determine exactly how the Malibu will beat the competition. It won't be sales volume, but here are a couple of others to consider:
GM'ers argue that this time will be different. Whereas Aura had no name recognition and a tiny base of Saturn owners to draw from, Malibu is a well-recognized brand that resonates with Chevy's enormous network of dealers and customers.
Lots of Chevy truck buyers own passenger cars too - many of them non-GM products - so they present a huge opportunity. Finally, GM is putting an enormous amount of money behind Malibu (building-covering signs in Manhattan and the world's largest billboard in Dallas, to start with), something it failed to do with Aura.
Some things have definitely changed. As analyst Tom Libby of J.D. Power points out, the Saturn brand doesn't carry much clout these days because of years of neglect. But he adds that for Malibu to do better, Chevy has to provide the consumer "with a compelling, can't-be-denied case for buying the Malibu over the Asian two."
What's the compelling case? GM says it is value. The base four-cylinder Malibu comes to market with standard features like satellite radio and OnStar and a base price of $19,354 vs, $19,620 for the Camry and $21,620 for the Accord. Overall, Malibus are expected to sell for about $2,000 less than the comparably-equipped market leaders.
Having a lower price will certainly get GM on some shopping lists, especially as the U.S. economy slogs through the subprime mortgage crisis and $90 a barrel oil. Whether or not that consideration turns into a purchasing decision will go a long way toward indicating whether GM can maintain its tenuous leadership in the U.S. car market - and solve the revenue puzzle that is essential to its long-term survival.