Despite rising costs and various market pressures forcing other automakers to exit the entry-level vehicle segments in the U.S. market, GM says it remains committed to the segment, offering up models like the Chevy Trax, Buick Envista, and Buick Encore GX. Backing the commitment is greater profitability and cost savings, resulting in significant vehicle EBIT improvements. Now, General Motors has briefly outlined its business case for the entry-level vehicle segment.
During a recent presentation delivered at the GM Investor Day event, company president Mark Reuss laid out GM’s strategy for the entry-level vehicle segment, highlighting cost-saving measures and profitability in the small SUV market, namely with the Chevy Trax and Buick Envista.
“Trax and Envista have helped raise our share of the U.S. small SUV market to its highest level since 2007. We now lead the segment,” Reuss said. “The new Trax is wildly popular and the calendar year-to-date sales are up 130 percent and it’s much more profitable than the model it replaced. We have seen vehicle EBIT improved by about 20 percentage points versus the previous model, driven by reductions in structural costs and the decision to simplify our offerings.”
That simplification is part of General Motors’ “Winning with Simplicity” initiative, first announced earlier this year by company CEO Mary Barra during the Q4 2023 earnings presentation. The strategy includes a streamlined product approach with reduced design and engineering expenses, lower supplier costs, reduced order complexity, and fewer buildable combinations. The strategy is expected to save the automaker around $200 million over the course of the 2024 calendar year.
“We’ve moved to one engine choice, for instance, and a front-wheel drive only. Moving away from multiple engine transmission and drive configurations is a huge savings for us, yet the vehicles still command higher pricing because of their design, packaging, performance, safety and innovation. That same profitability story applies to the move from the previous Buick Encore to the new Encore GX for Buick and Envista, resulting in a 14-percentage point improvement in vehicle EBIT,” Reuss said.
The company president also highlighted how various General Motors rivals “have simply abandoned” the entry-level segments “because they cannot make a business case for being in these segments.”
“We can, and we’re happy to have those customers on board,” Reuss states.
Total General Motors sales decreased by two percent during Q3 of the 2024 calendar year to 659,601 units. General Motors EV sales, however, were up 60 percent year-over-year, with the Chevy Equinox EV leading the charge.
Comments
They should bring back their entry level v8 sports car (Camaro) then.
Increased profitability doesn’t always translate well to product safety, quality and reliability. Just saying…
Because the Trax is so low and I’m so tall, it’s not on my list but if it was, I’d still have to question some of the choices made to keep the price as low as it is. I like it, though, but…
With six months ownership of a 2024 Trax Activ, I can report that it fulfills its mission as an entry-level vehicle just fine – and with a large dollop of style. Front-drive is sufficient for 90% of the people 99% of the time, and if the Apocalypse (or a Cat 4 hurricane) should happen, a little SUV’s drive-train won’t make a bit of difference. I’m more concerned about the longevity of the tiny turbo engine, but since I won’t put on more than about 4000 miles a year and will keep to its service schedule, I’m not losing sleep over it.
I have the Buick Envista and I absolutely love it, these vehicles are such a great value. I like you am concerned about the longevity, but I only drive 4000 miles a year as well and keep up on the maintenance so I’m sure this vehicle will do just fine.
GM realized there are people looking for affordable cars and not overpriced EVs? Wow. Who da thought? I also never knew water was wet…
Dear Mark Reuss,
Bragging that GM still has entry level vehicles like the Trax, Encore, Envista because of the systems in place is the biggest line of bull you have ever spouted. Mark, you are a car guy from way back and you know the only reason GM can offer these models is because you build them overseas with Labor rates far below minimum wage here in the USA. You abandoned the entry level vehicles built in the USA like Cruze and Malibu. I will never buy a GM Vehicle built in other countries with rates of pay that do not even pay minimum wage! Shame on GM for exploiting workers and shipping to the USA to sell!
Cheers to GM and thanks Mr. Reuss! Those overseas workers can really build great, high quality American branded cars for Americans. Hey UAW, did you ever considered being collaborative rather than adversarial? The outdated corrupt labor bs is getting really old. And by the way, why does collective bargaining mean only one voice can force themselves to speak for the car assemblers? How about some traditional American competition and freedom of choice there. Brag loud and proud about all the good paying jobs (relative to each nation’s economy) created and sustained here there and everywhere by GM.
My guess is any savings on the assembly line will be negligible.
You still need the full parts operation to support five different truck lines (1500, EV, HD, MD, LCF), the myriad of trim levels (9 on the 1500 alone), and the same-but-different Chevy and GMC versions.
It’s a shame GM put puny 3 cylinder engines in these entry-level cars when this platform has the 1.5T in other markets… and it achieves 20% better fuel economy with the 1.5T.
Entry level should be 16-20K…
If its one thing lower case gm did right was to design develop and release the Trax and Envista low cost crossovers. These crossovers have been a success story for Chevy and Buick in the low priced field. The management at gm should do a comprehensive case study on these vehicles and see where they can improve upon.
This is all well and good but some small CARS would be nice.