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Valley-built Cruze sales tumble 39%



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

By Burton Speakman

bspeakman@vindy.com

YOUNGSTOWN

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


Comments

1Freeatlast(1991 comments)posted 2 years, 2 months ago

GREAT CAR

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2SunnySkies(20 comments)posted 2 years, 2 months ago

Finally the truth. Back in January, in the State of the Union speech, Obama tried to take credit for the increase in domestic car sales. My husband was in Asia after the tsunami and said that the ONLY reason there was an increase was due to so many auto part factories being destroyed in Japan. Now 6 months later the truth. It always comes out.

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3UticaShale(854 comments)posted 2 years, 2 months ago

China just about consumed as many Cruzes to dent the debt we owe them, what else can they take in lieu of the sinking dollar.......what else do we make?
Hmmmmm....hydraulic fracking drills and associated equiptment?

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4DwightK(1256 comments)posted 2 years, 2 months ago

It's a great car that's been good for the valley. I hope GM can market it correctly and pick up sales.

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5Freeatlast(1991 comments)posted 2 years, 2 months ago

GREAT CAR
Thank You GM

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6AtownAugie(697 comments)posted 2 years, 2 months ago

"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." Sounds like GM can pull ahead only when the playing field is tilted.

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7BabaGhanoush(106 comments)posted 2 years, 2 months ago

"GM can pull ahead only when the playing field is tilted."

Or when there is no playing field.

Why do you think Obama is giving the buyers of the new KiddieKar called the Volt 15000, eh?

And when no one buys with that kind of bribe, the government will buy them.

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8palbubba(664 comments)posted 2 years, 2 months ago

Maybe Obama Bin Laden can spend billions more of OUR dollars to bail out a company that has no idea how to operate in a competitive field. Maybe it is time to give all GM employees more bonus money and be sure the bail out bill is left unpaid. If you voted for Obama Bin Laden for his promise of change, it is the only promise he has kept. Unfortunately for America all the change has been bad.

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9Ytownnative(1041 comments)posted 2 years, 2 months ago

was the sales drop the same time as the recall?

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10VINDYAK(1799 comments)posted 2 years, 2 months ago

Obama was not the savior for GM. GM and Chrysler took advantage of the government. If there was no government offer, they would have found another way, just as Ford did. Despite the massive government bailout, GM still went bankrupt and then threw many employees, stockholders and affiliates to the wolves. All with Obama's blessing.

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11JoeFromHubbard(1047 comments)posted 2 years, 2 months ago

Here we go again with another unexplainable jump in gasoline prices. Reasons for it are all over the map, no need to detail them.

If they remain excessive, as they now are, may be the Cruze will benefit. Not the best incentive to buy one but it helps.

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12TylerDurden(367 comments)posted 2 years, 2 months ago

Firat of all the main point of the article is that GM took advantage of the situation when competitors were in trouble. This is what they are supposed to do. At least Cruze sales didn't flatten out during the tsunami or even drop. I don't see anything wrong with the GM numbers from last year.

Secondly, and more importantly, GM has been reborn on third base and many here believe they hit a triple to reach that spot. Wrong. They were inserted as a pinch runner after the manager screwed the other team members and bribed the umpire to change the rules for his team alone. GM was allowed to run up massive operating loses after they knew they would be allowed to use those losses as a tax break. This was done through re-writing the bankruptcy laws especially for them. They took a big dump on all the original bond and stock holders. An absolute display of quasi fraud and unethical corporate selfishness.

Now, after everybody is back on level gound, we will see how the new GM reacts. I am quite sure the competitors are chomping at the bit to expose the still existent GM business structure that led GM into bankruptcy in the first place.

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13AnotherAverageCitizen(1175 comments)posted 2 years, 2 months ago

It is a shame so many want to run down one of the best employers in the area. So many on these boards want to promote fracking, even thou it will never produce the jobs (200,000) that kasich said. You want fracking for the potential jobs, but so many on these boards just criticize the good jobs that already exist.

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14AnotherAverageCitizen(1175 comments)posted 2 years, 2 months ago

Tyler,

Are you that critical of all the banks that were bailed ou?. For A whole lot more the GM recieved. Are you that critcal on Donald Trump that has claimed bakrupt several times while still flying around in his personnal jet?

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15southsidedave(4780 comments)posted 2 years, 2 months ago

Is this surprising considering the U.S. economy?

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16Freeatlast(1991 comments)posted 2 years, 2 months ago

GREAT CAR
THANK YOU GM

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17TylerDurden(367 comments)posted 2 years, 1 month ago

The GM situation is different. Not all TARP program companies filed bankruptcy. GM, however, not only filed bankruptcy, but were allowed to keep huge tax breaks that would have dissolved under existing bankruptcy laws.

So, chronologically, GM knew they would have these tax breaks after bankruptcy and continued to run up huge operating losses before filing. Talk about kicking your investors who put their own into equity into the company in the gut and then offering no recourse.

GM made their own bed, ran the worst corporation of the last 25 years, and then spit on the people who helped them remain a going concern. That is egregious.

http://online.wsj.com/article/SB10001...

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18commoncitizen(961 comments)posted 2 years, 1 month ago

Free, your repeating yourself. do you own a Cruze??

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19BabaGhanoush(106 comments)posted 2 years, 1 month ago

"GREAT CAR
THANK YOU GM

GREAT CAR
THANK YOU PRESIDENT OBAMA"

Actually, you should thank the South Koreans as it is the Daewoo Lacetti rebadged as the Chevy Cruze.
Now assembled in Lordstown from parts from all over.
The engine is from Austria.

Give credit where credit is due.

And certainly O'Bama had nothing to do with it as it was started prior to his arrival in the White House.

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20BabaGhanoush(106 comments)posted 2 years, 1 month ago

"Despite the massive government bailout, GM still went bankrupt and then threw many employees, stockholders and affiliates to the wolves. All with Obama's blessing."

Don't forget the bondholders who held 79% of the bonds and were forced by O'Bama to take a 60% haircut.

The ends always justify the means, eh?

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21BabaGhanoush(106 comments)posted 2 years, 1 month ago

"Are you that critical of all the banks that were bailed ou?. For A whole lot more the GM recieved. Are you that critcal on Donald Trump that has claimed bakrupt several times while still flying around in his personnal jet?"

Course we did as we found out later that some of the banks were FORCED to take the money.

And Trump used his own capital, not the taxpayers.

Just a very slight difference, eh?

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22Freeatlast(1991 comments)posted 2 years, 1 month ago

Free, your repeating yourself. do you own a Cruze
No I do not , But my company owns 7 for some of our saleman .
As I said
Great Car .

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23redgpgtp(37 comments)posted 2 years, 1 month ago

The problem that I have is that the government and GM blamed the bankruptcy on the economic collapse which isn't really true. GM was burning through so much cash that it would've went bankrupt eventually.

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24olddude(201 comments)posted 2 years, 1 month ago

It absolutely amazes me that folks can think its the right thing to do when Government tax dollars are used to bailout a private companies pension plan. To 100% is even more amazing..

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25Search4Answers(726 comments)posted 2 years, 1 month ago

The Cruze is just an older model than some of the cars coming out from some of the other makes. I mean it looks decent, has competitive specs. Reliability hasn't proven to be class leading, but it is GM.

If anything, Lordstown needs a second or third model to make so that sinking sales as the design ages can be evened out. Whatever happened to them bringing in the Chevy Orlando to build?

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