2016 Chevrolet Cruze, Malibu To Be More Profitable Ventures For General Motors
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It’s no secret trucks and SUVs are General Motors’ cash cows in the U.S. market. High transaction prices and decent volume make for good bottom lines in the segment, which has seen a resurgence with moderate gas prices in the past year.
But, General Motors isn’t banking on only its SUVs and trucks to turn a profit. GM has been outspoken on how Chevrolet needs to be back in the business of selling cars, too. According to a report from Morning Star, the 2016 Chevrolet Malibu and Cruze will be much more profitable for GM this go-around.
Speaking to GM product planning head, Mark Reuss, he said the company expects to see $1,500 to $2,000 more “variable profit” per sale than the models they replace. This was made possible through better purchasing and engineering scale, according to Reuss.
That means it may put Chevrolet back on track for self-imposed goal of 10 percent contribution from passenger car sales. Currently, Chevrolet is short of that 2016 goal.
The report also cites incoming over-the-air support for software upgrades for GM vehicles, which Reuss says has been tested in the 2016 Chevrolet Volt, and will eventually be deployed on a larger scale.
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Not so important with Cruze, but Malibu and Impala do not offer AWD whereas competitors do. I’m sure GM’s rationale is make the buyer get a CUV or SUV or pony up for a Cadillac sedan to get AWD. Oh so foolish! Many of those not wanting SUVs or CUVs or having to pay a Caddy price will go to the competitors!
AWD in this segment is so over rated by those who so not check the numbers sold.
The fact is cars like the Fusion sell in small numbers. 12K-15K out of 200K cars. The system Ford uses is not the segment leading and the car with AWD stickers around or over $40K. Once you get to this point would you buy a Chevy or Ford?
The reality is the Chevys were designed to weigh in 250-300 pounds less and that is a big jump that will result in more MPG, More Performance and much more sales as FWD is what 95% of the sales are. GM still offers for around $40K the GS and Lacrosse so it is not as if GM has nothing to offer. To be honest the Buick AWD in the GS is a world class system too.
GM has no agenda to force folks into a CUV as the are choosing this themselves. People in America like trucks and SUV and have really taken to the CUV as they are vestal in space and sit up high. Ever try to get a large box in a sedan these days that is a perfect cube of any size?
Even the Hatch sales may be challenges by the Trax as it is more In tune to where the market is. The CUV in the industry last year out sold sedans for the first time and it continues to grow. The split on CUV models is about half on AWD too so their AWD sales are stronger.
The fact is GM will sell more cars with better MPG and better performance in a larger package than just worrying about AWD.
I live in the snow belt of the great lakes and never have an issue getting around. While AWD can help it is not a must have. I often wonder what some of these people did years ago when there was no such thing as AWD?
Sales in this area are not really strong most people opt for the FWD if given a choice. The added cost has been a major factor to most or just cheap AWD systems that are not all that great when you get to the value divisions. You generally don’t get a Halldex system for less than $30K.
All I can tell you is that in my immediate family there are two of us that would have bought Impala LTZs if they offered AWD. I happen to live in a fairly mountainous area in western PA and fwd does not cut it!
I’m sure Chevy would like to have the additional 12-15K in Impala sales. The new Impala, though an excellent automobile has been somewhat of a sales flop!
I recently retired and my lease on my current car will end in a little over a year. One of the small luxuries I participated in was springing for a top of the line ATS AWD–fun automobile to drive, though plagued with numerous electrical issues. When the lease expires I will be looking for an AWD car, no suvs, cuvs, or trucks, and will not be spending $56k for another loaded Caddy. Nor do I have any interest in the Buick Lacrosse. I guess my clear agenda will be to purchase elsewhere!
The point here is to make money and satisfy 95% of those in the value segment.
If your family passed up the Impala you are in the slim minority. With AWD a fully loaded LTZ would be nearly $50K. May as well buy a ATS AWD for that price.
The Impala build and priced to sell with AWD would maybe cut 8K sales at best and it would not return much of a profit as they would have to cut the margin more. The whole point to Chevy is volume and profit. You sell only a handful at lower profits then you don’t make money.
For about $45K you can buy a Lacrosse with AWD and even more options and really pretty much the same car with more upscale things added. The new model will be here in a year and it will be very compelling.
If you want a cheap AWD go buy a Taurus for almost $50K GM will do just fine without you.
FYI cars with all the electronic controls work just fine in 18″ of snow here. We always make it to work the store and home with no drama. The only issue we have are the idiots on cell phones and fools on nearly bald tires that AWD can not address.
Scott,
Just some minor corrections please.
A fully loaded LTZ including adaptive cc is a little over $41K list. No reason AWD should be anymore than $2-3K above that. A fully loaded Fusion Titanium AWD with all the bells and whistles is a little over $40K. Big difference between $40-$45K and $50+ for a Caddy. The Lacrosse in my opinion is ugly.
Will always own AWD/4WD.
I live in Colorado and as you might’ve heard there’s snow and quite a few big hills here. I’ve never had four-wheel-drive or all-wheel-drive I get by with a front wheel drive And winter tires Michelin X ice 2 or x ice 3. Save that expensive all-wheel-drive for the Rockefellers.
My 2010 impala handles Atlantic Canadian snow without trouble and I’d definitely buy another. Also drove an 01 RWD silverado throughout high school which handled the snow well enough. A FWD car will work just fine in the snow if you have the right tires. I wouldn’t pay a premium for AWD unless I was looking at a Buick or Caddy.