By Jamison Cocklin
It’s widely viewed as General Motors’ first world-class compact car in decades, and three years since its debut, it continues to live up to that billing.
This month marks the Chevrolet Cruze’s third anniversary in North America. It was first introduced overseas in 2008 with the Daewoo and Holden brands, GM subsidiaries in Korea and Australia, respectively.
But since its launch in U.S. and Canadian markets Sept. 8, 2010, the Cruze has become a symbol of GM’s return to profitability and a poster-child for the company’s obligation to reshape its image after it emerged from a decades-long slide and one of the largest corporate bankruptcies in American history.
Even if you don’t buy American and whether you prefer trucks or sport utility vehicles over small cars, it’s difficult to refute the success of the Cruze. Worldwide, the vehicle is GM’s best seller. This year, it’s the company’s second best-selling model with 183,045 sold through August, and last year it was the company’s second best-selling model across all its brands with 237,758 sold. Throughout the summer, the car set monthly sales records, and it’s won awards and accolades from U.S. News and World Report, Forbes and NADAguides.com, among others.
More important, some say, has been the car’s role in leading GM’s resurgence after it emerged from Chapter 11 bankruptcy in 2009, when the federal government gave it nearly $50 billion.
“GM invested huge in the Chevy Cruze and it’s significant that they did it after the bailout,” said Tim Fleming, an analyst at Kelley Blue Book. “They invested in a small car because someone thought that’s where the market was going, and right now its paying off big for them.”
Last week, in a report to Congress, the U.S. Treasury revealed that the government had recovered $35.4 billion of the $49.5 billion it had given to GM, mainly by selling shares of the company it acquired during the bailout. Since then, GM has reported 14 consecutive quarters of profit as a smaller, more efficient company.
When it initially turned to the federal government as a victim of the recession and tapped credit markets, GM entered a deal that forced it to restructure and become more competitive. Bankruptcy proceedings allowed it to cut labor costs, lower debt and some of the government’s strict provisions pushed it to unload some of the stale, weak brands, that, along with fixed costs, had pulled the company down for years.
“They’re a stronger company, releasing exciting products versus years ago when one thing looked like another. It was always the same old, same old,” said Jim Graham, who before retiring in 2011 served as president of the United Auto Workers Local 1112 at Lordstown when GM retooled the plant and invested in the Cruze.
“That’s how the foreign market one-upped us. The mileage, engineering, quality is all there today and that’s how you compete.”
As Americans’ fixation on large gas-guzzling trucks and sport utility vehicles shifted with climbing gas prices, GM reacted with the Cruze. Its predecessor, the Chevrolet Cobalt, had sold a little more than 1 million units over a five-year period — in just three years the Cruze has sold nearly 1 million, with Lordstown producing 820,000 to date, said Tom Mock, plant communications manager.
As the world’s auto market shrank and grew increasingly competitive, GM sought to shift its image and redefine its place in both the North American and global auto markets.
“GM was always perceived as a truck brand. Their small vehicles were seemingly built for rental car companies and other fleets,” said Eric Lyman, vice president of editorial content at ALG, which crunches data and conducts brand research.
“With the restructuring, GM was charged with making every vehicle sell on its own without those lines being offset by sales of SUVs and trucks. The Cruze was the first vehicle to stand up on its own and live up to that charge.”
Lyman added that the Cruze helped “give traction to the company’s entire portfolio” by breathing competition into virtually every segment in a way the company “never really had before.”
“Not every product is a home run, but things like the Cruze and new [Chevy] Impala were for the brand and GM,” he said.
Since the Cruze was launched, the 2011 Chevrolet Volt and the 2013 Cadillac ATS won the North American Car of the Year award, the 2014 Chevrolet Impala was named the top sedan in the country and GM topped the 2013 J.D. Power and Associates Initial Quality Study. GM dealers also have embarked on a multibillion-dollar program to renovate sales and service facilities in all 50 states.
“If our first Cruze customer were to walk into a Chevrolet dealership today, he wouldn’t recognize the place,” said Kurt McNeil, vice president of U.S. sales operations, in a statement released with August sales. “The same holds true for Buick-GMC and Cadillac. The cars and trucks, the sales and service experience — everything is being elevated so we can offer customers the best ownership experience in the business.”
The company will soon launch all-new heavy duty pickups, and last week it unveiled SUVs for Chevrolet and GMC. It also will roll out a redesigned Cadillac CTS and Chevrolet Corvette Stingray.
“The strategy for everyone at GM is profit. Globalization is a part of that now,” Flemming, of Kelley Blue Book said. “It helps tremendously when you can share technologies and platforms and distribute the costs across them.”
As European sales slide and consumers there have demonstrated a preference for vehicles such as crossovers — a vehicle built on a car platform with the features of an SUV — GM’s variations on the style are staying competitive overseas, while sedans, like versions of the Buick Verano, are selling at a premium price at home and abroad.
Another unheralded part of the Cruze’s three-year history in the Mahoning Valley — where GM says its Lordstown facility generates about $472 million in wages and local taxes — is what it took to find a home for it here.
Graham, then UAW Local 1112 president, said that six months before the Cobalt’s arrival for production at the plant in 2004, it was slated to close. So, when GM was preparing to introduce and launch the Cruze, union leaders understood the urgency and work required to land the car in Lordstown.
Graham said at one time “Lordstown was not well thought of” among executives at GM. Years of labor turmoil, strikes and in-fighting throughout the 1970s and 1980s had earned it a bad reputation. Although Graham said the factory worked to reverse that before the Cruze’s arrival, the model has since made Lordstown one of “the crown jewels” of GM’s manufacturing capabilities.
“We’re light years ahead of the [Chevy] Cavalier and the Cobalt with the Chevy Cruze,” said Glenn Johnson, president of the UAW Local 1112. “The [Cruze] itself has put us in a great position, but you can’t forget the sacrifice of the membership to get it here.”
Cost-of-living increases and wage cuts were among some of the toughest national contract concessions, while on a local level stringent work arrived with the Cruze.
As GM continues to assert its presence in the global marketplace and prepares for new vehicle launches and redesigns, it has planned to delay the launch of the next generation Cruze.
An inventory shortage is presumably to blame for the cancellation of a shutdown week at Lordstown in August, and though the company has not yet commented on the delay, many have speculated that the car is selling so well that GM can afford to wait.