GM's First Mover Disadvantage
When General Motors emerged from bankruptcy, Chief Executive Officer Daniel Akerson found himself running a company with improved finances but woefully short of exciting new models to sell. Then he saw the redesigned 2013 Chevrolet Malibu still under development. Akerson figured that if he rushed the midsize sedan to market in February 2012, the Malibu’s slick interior and sculpted styling could attract buyers. The timing seemed ideal: Japanese rivals were still restocking dealers in the wake of a devastating earthquake in early 2011, and Ford Motor, Honda Motor, and Nissan Motor wouldn’t have their revamped midsize offerings ready until fall 2012.
Not all of the model’s various versions were ready for production. So Akerson rolled out only the pricier Eco version of the Malibu in February, one with some hybrid-like features that costs almost $3,000 more than the line’s $23,150 base model. The less expensive variants—the ones most people will actually buy—are only now arriving on car lots.
That’s left GM trying to create buzz for the new Malibu many months after the new car smell has faded and just as rivals are cranking out newer, flashier 2013 models. “What they did was right, but the way they did it has actually cost them from a marketing standpoint,” says Jim Hall, principal of auto consultancy 2953 Analytics. “It means after launching the new Malibu, now they get to launch it all over again—only now they’re launching it with a bunch of other new cars.”
The Malibu rollout is a potential stumble in a segment that’s crucial to a mass-market car brand. Midsize sedans are “the meat and potatoes” of the industry, says Dave Sullivan, an analyst with AutoPacific. That’s because the top six midsize models by sales (Toyota Motor’s Camry, Honda’s Accord, Nissan’s Altima, Ford’s Fusion, Hyundai’s Sonata, and the Malibu) account for one of every eight vehicles sold in the U.S. But so far, Akerson has little to show for his gamble: Malibu deliveries through August are up 5.1 percent, lagging the U.S. market’s 15 percent increase, according to researcher Autodata.
Right now there’s a pileup of new midsize offerings. The Camry, the best-selling car in the U.S. for more than a decade, was redesigned last year, while the Accord, Altima, and Fusion are all new this year. The Malibu is having a hard time matching up in key measures. The base Malibu’s combined city and highway rating of 26 mpg isn’t as good as the 2013 Altima’s 31 mpg or the 28 mpg of the 2012 Camry, 2013 Sonata, or 2013 Fusion. The Malibu’s rivals also start at a lower price. The Altima, for example, begins at $22,280, almost $1,000 less.
The Malibu isn’t alone in adding technology. Ford’s new Fusion is available as a 47-mpg hybrid, 22 miles better than even the Eco in city driving. And Honda has given its latest Accord lots of gadgets, including a rear-facing camera that sends images to the dashboard screen whenever the driver moves into the right lane. Says Jessica Caldwell, an industry analyst with Edmunds.com: “This will probably be the most competitive time in the [midsize] segment history.”
GM executives say that by selling the expensive Eco early it was easier to wind down its inventory of older, cheaper 2012 Malibus. The Eco version accounted for 17 percent of Malibu sales in August, above GM’s goal of 10 percent. Says Don Johnson, Chevrolet sales and service vice president: “It gave us a bit of a preemptive strike to introduce our new body style, and I think we’ve been successful in getting that level of awareness up.”
Analysts are less certain. Hall says that if GM had been able to introduce the entire range of Malibu sedans at the same time as the more expensive Eco version, it would’ve been established in consumers’ minds before the new competitors came out. “All you do is a little kick-up on advertising to keep the awareness there,” he says. “Now, they have to scream as loudly as Honda and Nissan and Ford.”
Chevy is doing that with new ads, including television spots that play off the “Malibu State of Mind” with Southern California images, commercials planned for Major League Baseball’s World Series, and others that target women featuring fashion designer Isaac Mizrahi. Nonetheless, GM has learned a tough lesson: that even having a stylish, technology-laden midsize car isn’t enough these days. “That combo is almost the price of entry rather than standout attributes,” writes James Healey, an auto critic for USA Today. Akerson has found that out firsthand.