GM needs to diversify model in US, improve gas mileage, experts say
Automotive experts believe General Motors needs to improve the value and fuel efficiency of the next-generation Cruze for it to compete effectively in the small-car market worldwide when it debuts with its 2015 model.
One of the first things GM could do is diversify the product line by introducing hatchback or station wagon versions of the Cruze into the U.S. market. These versions already are offered in Europe, said Michele Krebs, senior analyst for Edmunds, an automotive information company.
Offering different versions of a vehicle is a relatively inexpensive way for a model to appeal to more people. Once the platform is developed, it does not cost much to put on a different body type, she said.
“Foreign companies have been doing it for years to attract a wider audience,” Krebs said.
GM does plan to offer a different version with the diesel being released in 2013. Volkswagen has been doing very well with its diesel version of the Jetta for some time, she said.
GM cannot be conservative with the Cruze like it was with the Malibu redesign, Krebs said.
The unions also are hoping for some variation of the Cruze, said Glenn Johnson, president of United Auto Workers 1112 in Lordstown.
“I’ve seen the two-door coupe version, which I think is a beautiful car, but [the company] didn’t think there would be enough consumer interest to build it,” he said.
The workers at the plant haven’t been told anything about new versions of the Cruze, but the hope is there will be some diversification beyond the diesel, said Dave Green, president of UAW 1714.
The next generation of the Cruze has overshadowed the diesel just based on the size of the commitment GM made to each product, Green said.
The company will spend $200 million to develop the next-generation Cruze, while the diesel was a $5 million investment.
The Cruze is the first truly global vehicle for GM, said Jesse Toprak, vice president of market intelligence at TruCar.com, an automotive website.
He said the current Cruze is a solid vehicle, but GM cannot stand pat with the Cruze while its competitors are making improvements.
“A solid vehicle is not enough when everyone else is making great vehicles,” Toprak said. “GM has a lot riding on the Cruze.”
GM has to accomplish two things with the Cruze: Keep its loyal customers and grow sales by attracting new ones, Toprak said.
They could do this either by improving the Cruze’s styling or increasing its value, he added.
“Hyundai did that with the Sonata. They made it such a good value, you get so much car for the money that it was foolish not to check it out,” he said.
The small-car market is one of the most competitive worldwide, Toprak said. It’s one that lends itself to vehicles that present great values.
Fuel economy must be better on the next-generation Cruze.
GM needs the Cruze to reach 40 miles per gallon on the highway on nearly every version of the Cruze and 35 combined city and highway mpg, he said.
“Forty mpg is the new 30,” Toprak said.
Krebs went even further stating the Cruze will need to reach at least 40 mpg for highway driving even on the most-basic models.
“They have to do so not just to keep up with competition, but to keep up with the rising federal fuel efficiency standards,” she said.
The contract for the Lordstown plant runs through 2020. Fuel efficiency standards begin to rise in 2017 and every automaker’s passenger fleet must average 54.5 mpg by 2025.
GM is going to be making a tremendous investment in the development of the next generation of the Cruze, Toprak said.
“They need to work on a lot of things to get the mix right, he said.