MotorWorld by Alex Taylor III Column archive

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.

By Alex Taylor III, Fortune senior editor

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.

Smack down: The 2008 Chevy Malibu (above) vs. the 2007 Toyota Camry

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:

  • The new Malibu has to sell better than the old Malibu, which was a homely child from birth and seemed to find its way into airport rental car fleets more frequently than it did the driveways of private homes. Some 103,000 old Malibus were sold during the first nine months of 2007.
  • Success for the Malibu can't come at the expense of the Impala, Chevy's other entry in the midsize car segment. Though often overlooked because of its innocuous design, the Impala is GM's best-selling passenger car, with nearly 250,000 sold so far this year. Cannibalizing those hard-won sales won't do GM any good.
  • Finally, Malibu has to make Chevrolet part of the national conversation again - especially on the East and West Coasts. Justly renowned for its pickups and SUVs, Chevy is all but invisible when the talk shifts to passenger cars, much less advanced technologies and alternative fuels. Since Chevy is GM's biggest brand by far, that has to change.

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. Top of page