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Valley-built Cruze sales tumble 39%

Published: Thu, August 2, 2012 @ 12:01 a.m.

By Burton Speakman



Sales of the Lordstown-built Chevrolet Cruze have taken a hit a year after taking advantage of supply problems for foreign automakers Toyota and Honda.

The 2011 tsunami and resulting problems in Japan slowed production in that nation and allowed the Cruze to reach record sales levels.

Last month, 14,954 Cruzes were sold, a 39.3 percent decrease from the 24,648 sold in July 2011, according to the General Motors Co.

Through the end of July, sales are down 12.7 percent from 147,620 in 2011 to 128,838 this year.

Overall, it was a down month for GM and the Cruze, said Kristen Andersson, senior analyst for TrueCar.com, an automotive information website.

“One of the issues with both GM and the Cruze has been poor marketing. The Cruze is an excellent vehicle,” she said. “They [GM] need to do more to promote the Cruze in coastal areas where the Japanese vehicles are strong.”

GM needs to get a new segment of the population considering the Cruze, Andersson said.

The good news is that GM has realized there are some issues with the company’s marketing, she said. “They’re making changes already,” Andersson added.

The Cruze also is facing internal competition. GM is trying to remove 2012 Chevrolet Malibus from lots to make room for the 2013 Malibus, said Glen Johnson, president of United Auto Workers Local 1112 at GM’s Lordstown complex. The company has heavy incentives on the 2012 Malibu.

“The biggest issue the Cruze is facing right now is that people going onto the lot looking for a Chevy are facing the decision of buying a Cruze or paying just a little more for a 2012 Chevy Malibu,” he said. “I think things will get back to normal once those 2012 Malibus are off the lot, and we get our Chevy price range back to ourselves.”

It’s better for GM not to offer huge incentives on the Cruze or have a lot of them as fleet sales because they lower the value, said Dave Green, president of UAW Local 1714.

“As long as the company is making money, things are OK,” he said. The Cruze now has one of the higher profit margins in its segment, Green added.

Andersson agreed the impact of incentives has hurt Cruze sales. GM in July provided $2,700 in incentives for the Malibu compared with $1,200 for the Cruze.

Despite the sales decline, Johnson said there’s no truth to rumors of sharp production cuts and preparations to remove the plant’s third shift.

The company has been consistent in its message that if too many Cruzes are being built, it will shut down the plant for a week or two as opposed to eliminating a shift, which would reduce production too much, Green added.

The Asian-based competitors are back, and there are new entries into the Cruze segment of vehicles, said Tom Mock, communications manager for GM at Lordstown and Parma.

“We’re off our 2011 highs, but we have retained our brand-building discipline,” he said. “Cruze incentives and fleet sales are low, especially compared to our competition. This helps enable strong transaction pricing and enhances Cruze long-term image and resale value.”

Last year, the Cruze was able to take advantage of the issues with Japanese vehicles, combined with fewer small cars on the market, Andersson said.

“Cruze was a newer vehicle at the time, and it had a lot of buzz. It was a perfect story [for Cruze sales],” she said.

GM reported overall July U.S. sales of 201,237 vehicles, which is down 6 percent compared with a year ago. Sales to retail customers declined 3 percent. Sales to rental fleet customers declined 41 percent. The fleet decrease was in line with previous estimates from the company.

GM’s combined retail sales of mini, small, and compact cars, which would include the Cruze, were up 41 percent in 2012 compared to the previous year.

At Ford Motor Co., overall sales slipped 4 percent, with the Lincoln luxury brand and Fiesta subcompact dragging down July sales. Lincoln sales dropped 11 percent, while the Fiesta was off 23 percent. Sales of the Escape small SUV fell 12 percent after the latest version was recalled for safety problems.

Ford’s best performer was the Fusion sedan, which saw sales climb 21 percent. The Ford Explorer SUV was up 14 percent.

The third big U.S. automaker, Chrysler, saw sales rise 13 percent — led by strong demand for its Ram pickup and Chrysler 200 sedan.

Chrysler’s top seller, the Ram pickup, rose 17 percent in July as home building increased. And the company’s highly-anticipated new car, the Dodge Dart, saw sales hit 800.

Contributor: Associated Press

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