• Jul 21, 2008
GM currently owns about 13% of the small car market. With demand for small vehicles increasing with the price of black gold, GM is out to increase that market share. Nevertheless, even if it doesn't increase its share, it plans to make more money off of each small car sold. How? By raising the price, naturally.

The plan is simple: make better small cars, charge more for them. The upcoming Cruze could run you a few thousand more than the outgoing Cobalt, for instance. The test is to see whether cars like the Cruze will be worth the premium. GM Global Design Chief Ed Welburn said, "In North America, we never did a good small car." The General plans to bury that piece of its history... but it's going to charge you, the consumer, for the funeral.

The idea that GM can lasso the small car market while charging a premium, at the same time as slashes its marketing budget by $1.5 billion, takes some effort to swallow. One analyst said that demand for small cars will outstrip supply, so GM could get away with it. However, until we see proof of small GM cars that take bats to the established competition, we'll have to give this plan a "Hmmm."

[Source: Automotive News, subs. req'd]


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  • 54 Comments
      • 6 Years Ago
      Thats OK, the new CAFE standards are going to make it hard to get a compact for under $20,000 anyway.
        • 6 Years Ago
        The tanking dollar will make it hard to buy a compact for under $20,000. CAFE will have almost nothing to do with it.
        • 6 Years Ago
        Oh yeah I forgot, those hybrid drivetrains are free.
      • 6 Years Ago
      Holden, if you are a historian, you would know pretty much everything rusted quickly back then. I remember my parent's Mercedes and Toyota truck turned to a rust bucket just like the neighbor's Torino and F100. Porsche started to zinc-dip the coachwork on the 911 around 1978 or so and that pretty much took care of the rust problem in the 911 and I am sure other manufacturers followed their lead. In general, cars were pretty awful in the early 70's with all the emissions equipment and safety regs. Not just the imports.
      BLS
      • 6 Years Ago
      the only ride that GM has made that was worth a crap since the musclecars of old is the VETTE---and even they sucked in the 80s
      • 6 Years Ago
      They will have to sell them at a premium due to the deflated dollar against the euro.

      Rumor has it that GM is losing on every Astra it imports and sells in America.
        • 6 Years Ago
        I believe they expect to make them here, which will give them a price advantage, not disadvantage.
      • 6 Years Ago
      If the coming small cars are anything like the new Malibu they will be hits. Have 1853 on my Malibu 4 cyl. The average speed is showing 31 (means very little HWY driving). Average MPG is 23.5. Expect at least 32 on trip. Have a real good friend that bought a 4 cyl Honda. It now has 4900 and their city mpg is at 17.9. I just love to break his stones when we get together.
      • 6 Years Ago
      In theory, demand vs. supply means that GM can get away with it. In practice, GM needs to provide quality. There aren't enough gullible people that will pay a premium for GM's cars when they can get Toyota cars for less. And if the heads at GM are that dumb to not know this, then surely they will get bought out before the end of this decade.
        • 6 Years Ago
        Good point, and don't think that Toyota isn't looking down the road at just that possibility (buying-out GM). It would be Gernal Motors just deserts for having sat on their asses all these decades and not designed, not offered, not sold cars that competed with imports that now OUT-sell them because they're the cars the public WANTS to buy.
      • 6 Years Ago
      "GM Global Design Chief Ed Welburn said, "In North America, we never did a good small car." "

      Truer words were never spoken.
      • 6 Years Ago
      Wow, does this smack of arrogance?

      Holy crap, these guys never cease to amaze me.

      GM needs a shakedown at the top of the food chain. These guys need a serious hunk of humble pie.
        • 6 Years Ago
        How does admitting they "never did a good small car" make them arrogant? Did you confuse this with a Toyota article?
      • 6 Years Ago
      GM always made junk and continues to make junk. Their VPs in charge of sales were so arrogant last year, that they made bold predictions that their "monster truck" division was and would remain in top demand. Yeah, well, so much for their arrogance and prognosticative abilities. Until they improve QUALITY and RELIABILITY, they will continue to suffer. I joined Toyota years ago and am totally satisfied with both.
      • 6 Years Ago
      They'll never hit their mileage (or sales) targets until they get weight under control. The Cobalt is over 400 lbs. heavier than either the Civic or Corolla.
      • 6 Years Ago
      You mean if GM can build a good quality small car, they can sell it at a premium?

      How groundbreaking. I sure hope Toyota & Honda don't get wind of this.
      • 6 Years Ago
      If this is true ("...by raising the price") then GM is heading down the same decades-old path it's trodden too often, and the results will be the same...they won't be one of the players at the end. Look how the imports have stolen sales from the domestic manufacturers by selling high-quality, fuel efficient cars since the early 1970s. GM (Ford and Chrysler) sold crap. Now GM is going to try the same tactic...again...and again, they'll fail. GM cars are NOT high-quality vehicles (compared to imports) and may never be. And even if they are, the public's perception of their vehicles is that they're second-best to Toyota, Honda, Nissan, etc., etc. Good luck GM, but you still have your corporate head up your rear if this is your approach to capturing the rapidly exploding small-car market(!).
        • 6 Years Ago
        But why not the LS2LS7?, that's the point. GM SHOULD be competing on that level. Many of these guys - who own tuners (Hondas, Nissans, etc.) are also family men with kids. They have sedans on their garages too, but they're not domestics either. Their other car is also a Honda, Nissan, etc. GM just doesn't offer cars that appeal to guys in that age bracket and life-style. The Cobalt - even though the SS has decent stats - isn't appealing.
        • 6 Years Ago
        ML, my guess is that if your friends are hopping up Civics, then neither you nor them were actually around in the 1970's and early to know just how craptastic the imports were. I am not repeating some mantra sent down by the Big 3. It's a fact.

        Your example of your friends believing in the superiority of the imports supports my statement that the children of the baby boomers, who were the primary customers of import brands, have grown up believing that imports are superior.

        As far as making power in a sport compact, you can build a GM Ecotec to get much more power than you will from a Honda 4 banger. GM's own people have built Cobalts for drag racing using 800+ HP Ecotecs.

        And in comparing domestics to imports- please don't try tell me that the dressed up Camry that is the ES350 is superior to the CTS.
        • 6 Years Ago
        "Look how the imports have stolen sales from the domestic manufacturers by selling high-quality, fuel efficient cars since the early 1970s"

        Actually, Japanese imports through the early 80's were pretty much crap. In the 1970's they were crap that rusted out within three years. It was only in the mid 1980's that Japanese cars began being comparable to domestics.

        From that point on they surpassed the domestics until the current market where the difference between GM, Ford and the Japanese imports are negligible.

        The myth that the Japanese imports were always superior is an absolute joke. The Asian brands benefitted from improving and expanding (phyically and product -wise) in unison with the improved incomes and lifestyles of baby boomers. Baby boomers initially bought Japanese imports because they were affordable and delivered (for the most part) given the price point at which they were sold. Their success is do to being at the right place at the right time for baby boomers, whose children, in turn, grew up in Camry's and Accords and thus believe said brands to better than domestics because that's what they were exposed to in their youth. This is no different than their grand-parents having been Ford or Chevy buyers, where never the twain shall meet.
        • 6 Years Ago
        I agree with you completely. Sadly big 3 US auto companies are totally out of touch with current buyers and have been producing crap compared to Japanese for the last 15yrs. The worst part is that they are still thinking short term and trying to come up with Volt/Cruze only when they saw success of Toyota Prius or Honda Civic/FIT. Its sad that as big as they are they have managed to completely overlook small / efficient cars sector totally up til now and now they have the nerves to blame the buyer, oil market, and other factors. For example, over the years Honda has been critized for making cars thave have "little" (according to American standards) amount of torque and HP (i.e TSX 200hp, Civic/FIT) but guess what they stick with their theory "Bigger is not alway better" and it has been paying off for them.

        Also you are very much dead-on right about car tuning espcially involving young people. Basically right now any kid out there that knows anything about car that is looking for a car will go out and gets himself older Japanese car that be easily modded before GM/FORD/CHRYSLER product. Hell, Kids with little more money go for older European (VW or BMW) before they think or touch a US product. It is truly sad that US big 3 in their infinite wisdom years ago decided to ignore they next generation customer by not producing any good small cars that are cheap and easy to mod. Yes, there are exception but they are rare and aren't respected by young kids like Civic/old 3 series/VW golf are. Nobody is going to be modding or running around in an suburban in 10yrs from now. Geez old Honda Civic/Acura Integra are legends (most people will be shocked with what 15 year Acura with VTEC are sold for these days).
        Honda/Acura does even need to "SELL" their cars they already have million of young buyers sold who will never look anything else beside Honda or maybe VW/BMW. Most kid who grew up in 80/90/00 will totally abandon the US brands cause they can't relate to them.
        • 6 Years Ago
        Your point Holden Miecranc has some merit, albeit you're repeating statements made by domestic manufacturers in the last decade in an effort to discredit foreign imports. But GM, Ford, & Chrysler haven't sold and aren't selling vehicles that appeal to - for instance - the tuners. Several of my buddies have Hondas and Nissan, and none of them drives or hops-up and domestic small car. Why? Because "...they're crap!" And if you think GM, Ford, & Chrysler builds cars that really compete with a Lexus, Infiniti, Maxima, Acura, then you've not kept-up with what's really on the market nowadays. The Chrysler 300C, Lincolns, or any of the Buicks aren't even close.
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