In the old GM (NYSE:GM) way of operating, a dud like the Chevy Malibu would become the subject of deep discounts and rental car company sell-offs rather the focus of engineer improvements. That’s not the MO in 2013 for a company that considers consumer sentiment as important as sales figures and overall automobile performance. Hence the new look of the 2014 Malibu, out just eighteen months after the last version bombed.
The new version of the Malibu addresses what critics considered its signature weaknesses: a lack of backseat space, poor fuel economy, and lackluster style. The 2014 will feature a grille with notes of the Impala, have slightly more legroom for passengers in the back, handle better on the curves and get better mpg (a 5 percent improvement overall). Mark Reuss, who is GM’s North America President, described the moves as evidence the automaker “isn’t sitting still in…the mid-sized segment.”
To most observers, it’s more like a necessary move to compete with the Honda Accord and Ford (NYSE:F) Fusion, both of which have outsold the 2013 Malibu by heavy margins this year. Compared to 71,000 Malibus, Ford has sold 36,000 more Fusions (107,000), while Honda had an even bigger output with 122,000 Accords. Though changes often take several years to roll out, GM’s 1.5 year response reflects a far better strategy than many are used to seeing from the top U.S. automaker.
Larry Dominique, executive VP of TrueCar.com, remarked on the industry’s high-stakes division, “It’s too important of a segment not to be competitive.” Dominique is applauding the Malibu reboot as a proactive move by a company that would have reacted otherwise pre-bailout. Specifically, GM would have been unlikely to revamp the Malibu and simply upped its discount policies to move more vehicles, a strategy which costs car makers millions.
Instead, GM is making the effort to respond to consumer complaints about fuel economy and space in the back seats. Toyota (NYSE:TM) took a similar approach to updates for its latest Camry and has been winning in the segment, with nearly 133,000 sold this year. While the 2014 Malibu still needs to succeed with the public for this move to be considered a winner, investors have to be happy about the current GM strategy.
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