GM Aims New Malibu at Retaking U.S. Sales as Chevy Goes Global

General Motors Co. (GM) redesigned its Chevrolet Malibu with better fuel economy and sportier looks as the automaker seeks to regain sales in the U.S. and improve the Chevy brand’s global reputation.

The new model, which will be revealed on a global webcast and at the Shanghai auto show today, will feature styling cues from the Camaro sports car and should exceed 30 mpg in highway fuel economy when it goes on sale in January 2012, said Mark Moussa, GM’s chief engineer for mid-sized and full-sized cars.

The car, which was engineered to use mostly the same parts globally, may sell in 100 markets with about 400,000 deliveries a year, said Michael Robinet, vice president of IHS Automotive. The car likely will be built in Hamtramck, Michigan; Kansas City, Kansas; and internationally in China, South Korea and Uzbekistan, Robinet said.

“This will be GM’s first truly global mid-sized sedan,” said Robinet, who’s based in Northville, Michigan. “GM finally got the memo. They have figured out that they don’t need to reinvent the wheel all over the world.”

GM pursued a similar strategy of global production with the Chevy Cruze compact, which went on sale in September. Bob Lutz, who retired as GM vice chairman a year ago, pushed the automaker to globalize engineering to save money on some parts and free up cash for features with more consumer appeal, Robinet said.

GM told suppliers earlier this year that it would start producing the Malibu in January 2012 instead of April of that year. Chief Executive Officer Dan Akerson is pushing to speed the development of new models after the Detroit-based company’s 2009 bankruptcy forced cuts in its engineering and new-model budgets, resulting in a dearth of new vehicles.

U.S. Market

In the U.S., GM is aiming to deliver more than the almost 199,000 Malibu sedans Chevrolet sold in 2010, Russ Clark, director of the brand’s product marketing, said in an interview, without giving a specific target. The company also hasn’t provided a global sales target for the Malibu.

The Malibu’s share of the U.S. mid-sized car segment fell to 7.1 percent in the first quarter from 9 percent a year ago, according to Autodata Corp. About 5 percent of people shopping for mid-sized cars online in February researched the Malibu, about one-third of the percentage from three years ago, according to Edmunds.com. Deliveries have dropped 1.2 percent this year, according to Autodata in Woodcliff Lake, New Jersey.

The Malibu will offer only a 190-horsepower, 4-cylinder engine and not a V-6 engine as in previous versions. The car will be competitively priced with the current Malibu, which starts at $22,735 including freight charges, Clark said, without giving a particular price.

Fleet Sales

Chevrolet aims to shrink the percentage of sales to fleet customers such as rental-car companies to about 15 percent to 20 percent of the model’s total deliveries from more than 20 percent of the current car’s sales volume, he said.

The Malibu is a vital piece of Chevy’s attempt to build up the brand’s image, Clark said.

“The mid-sized car market is the largest in the U.S. and the most competitive,” he said. “It’s the segment by which your brand gets judged.”

The Malibu will face competition from quickly growing models such as Hyundai Motor Co. (005380)’s Sonata, Kia Motors Corp. (000270)’s Optima and Volkswagen AG (VOW)’s Jetta, Edmunds CEO Jeremy Anwyl said.

“They desperately need the new Malibu,” Anwyl said. “Chevy re-established credibility in the mid-size car market with the current Malibu. The car is just the victim of a long product cycle.”

GM is spending almost $4,200 on sales incentives and discounts for each Malibu sale, according to Santa Monica, California-based Edmunds. The discounts are large enough that the Malibu has taken some buyers who entered showrooms intending to buy the Cruze, Anwyl said.

“GM needs to be able to sell the car, not the deal,” Dave Sullivan, an analyst at AutoPacific Inc. in Troy, Michigan, said in an interview. “That’s the problem GM has had for so long. People are going to be attracted to this vehicle for its style, technology and powertrains. That’s a step in the right direction.”

To contact the reporters on this story: David Welch at dwelch12@bloomberg.net; Craig Trudell in New York at ctrudell1@bloomberg.net.

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

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