GM to Show Buick Verano for ‘Crowded’ Compact Segment

General Motors Co. plans to show the Buick Verano compact car next week at the Detroit auto show as the automaker expands the lineup of the fastest-growing brand in the U.S. into the competitive small-vehicle segment.

GM will begin selling the Verano in the fourth quarter, the Detroit-based automaker said today in a statement. The Verano, which shares the underpinnings of the Chevrolet Cruze that began sales in late 2010, will be Buick’s first compact car in the U.S. in more than 20 years.

Chief Executive Officer Dan Akerson is pushing GM to improve the fuel economy of its fleet with smaller cars and more electric offerings to comply with standards that require automakers to reach an average of 35.5 mpg by 2016. The Verano will compete in a compact segment that will grow to 25 entries this year, according to J.D. Power & Associates.

“It could be very difficult to gain traction because of the amount of vehicles that have just ballooned in the segment,” said Dave Sullivan, a product analyst at AutoPacific Inc. “The compact segment is extremely crowded. It’s really going to be dependent on fuel prices, how successful a lot of these vehicles are going to be.”

The Verano gets an estimated 31 mpg on the highway, GM said today. The average price for a gallon of gas in the U.S. climbed to $3.08 yesterday, the highest since October 2008, according to the American Automobile Association.

GM will assemble the Verano alongside the Chevrolet Sonic small car at its plant in Orion Township, Michigan. In order to make the compact cars in Michigan, United Auto Workers Local 5960 agreed that 40 percent of workers at the factory would earn the second-tier wage typically paid to new hires, who get about $14 an hour or about half the regular wage.

Wage Agreement

The UAW agreed to the two-tier wage system in 2007 to help GM, Ford Motor Co. and then-Chrysler LLC stem losses. The Orion Township local agreed to expand its use.

The Verano is Buick’s third new model in the U.S. in the past two years, following the LaCrosse and Regal sedans. China’s version of the Verano went on sale last year as the Excelle GT.

The new LaCrosse and Regal helped propel Buick U.S. deliveries to a 52 percent increase in deliveries last year, the most of any brand, according to Autodata Corp. in Woodcliff Lake, New Jersey. LaCrosse more than doubled sales from 2009, according to Autodata.

Luxury Rivals

GM wants the Verano to compete against Volkswagen AG’s Audi A3, Toyota Motor Corp.’s Lexus IS 250 and the Volvo S40, Jim Federico, chief engineer for the Verano, said last month in a briefing with reporters.

The automaker hasn’t announced pricing for the Verano. The car shares the engine of the Regal, which is about six inches longer, and a turbo-equipped Verano will follow, Federico said.

GM climbed 83 cents, or 2.2 percent, to $38.90 at 4 p.m. in New York Stock Exchange composite trading. The shares advanced as much as 3.7 percent today after Morgan Stanley analyst Adam Jonas said the automaker could generate “100 percent” of its market capitalization in cash during the next five years.

GM’s net cash may rise to $71 billion by 2015 from $19 billion at the end of 2010, according to estimates by Jonas, who is based in New York.

To contact the reporter on this story: Craig Trudell in Southfield, Michigan at ctrudell1@bloomberg.net.

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net.

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