Henry Phish

New Products and Old Standbys

So now, with the announcement a couple of weeks ago that GM is building a new small car, the Chevrolet Cruze, a new iron has been cast into the fire.

As stated on CNNMoney.com:

“Particularly at GM, they’ve always viewed their small cars with disdain,” said Ed Kim, an analyst with industry marketing consultants Autopacific.

With rising gasoline prices, GM executives have said in the past that American consumers should be willing to pay a little more for a nicer-looking, better-driving small car.

Think the Honda Civic; a car that everybody wants to own and that never goes on sale and you kind of get the picture.

Harking back to an article I wrote about Toyota a few months ago discussing Solid State Marketing, the Chevy Cruze fits the mold perfectly. Solid State meaning: giving consumers a product with a high sex appeal and less breakage.

This method of marketing appeals to both new car buyers and used car buyers alike in that it is much less wasteful than many current marketing strategies. The cars themselves maintain a significantly higher value than many other automobiles, and this translates to higher values for used car dealers at the time of trade in as well. Further, you maintain brand loyalty for their next car, as well as a built in sales pitch for an up sell later on in life.

…ultimately, the key idea to take away here is that customer demands have driven the market, and what the consumer wants is something that fits their lifestyle.

While it can’t be argued that GM is trailing Toyota and Honda in it’s quest to create the perfect small car, GM is gaining ground. With the worlds first fully electric car in the Chevy Volt entering full production in 2011 and the announcement of the Cruze to begin selling stateside by 2010, GM looks to be a trendsetter in making an innovative product that makes people excited, a key note that could lead to big sales for automakers and consumers alike.

Just a few thoughts on roadblocks along the way:

One of the big issues I’m recognizing is that cars in their first and second years of production tend to be lemons…and lemons have been an issue that has plagued GM in the past.

When I bought my Saturn ION in it’s first year of production, I was subject to two recalls as well as a bum radiator, and a hood release cable that snapped in two while I was trying to fill the coolant tank…lets face it that’s an issue. As it were, I missed work twice that year because of my car; that’s two times too many.

GM hasn’t had a car that racked up reliability points like a foreign manufacturer since the Saturn S series, and that is a serious consideration on every ones mind when buying a car.

The European test fleet in 2009 is going to be instrumental in working the bugs out, and trust me they are going to need it if they want this car to perform anything near the age old, and trusted, designs that Toyota and Honda put out year after year.

Another issue I see is the flood of similar cars in the marketplace. While GM hasn’t released price points, or even MPG specs on the Cruze yet, the car faces stiff competition. In order for this car to win market share, it needs to be able to display it’s credentials and go toe to toe with foreign car makers…not just close…toe to toe.

With the new 2009 Cobalt coming out this fall, reviewers are rating the car as just south of the Toyota Corolla in almost every performance criteria…the difference in cost being about a thousand dollars more for the Corolla. Even the 2009 Yaris fares better for a couple of hundred dollars more. We need to expect more from the Cruze, better interiors, better performance, better quality, and better gas mileage if it’s going to compete.

Finally, consistency. These cars need to consistently be able to perform and attract attention. Buying American is alright as long as I can brag about my car a little, and that’s what American cars have been missing for years…bragging rights. Other than the Mustang and the Malibu I can’t even think of a car that GM makes without thinking I’ll bet Honda/Toyota can do one better…and that’s the crux of the problem as I see it.

Part 3: Product Recalls - Ouch that hurt

Update: The crossover lines have become a popular commodity these days as they have begun eating away at the market shares of cars, minivans, and sport utility vehicles. This week, Chevy released the Traverse, a brand new crossover vehicle with a five star crash test rating and a 24 MPG fuel efficient engine. At 24 MPG, the vehicle is nearly as efficient as a mid-sized car, which is important, since the honest truth of the matter is that anything less than 24 MPG highway is a dinosaur. Chevy also touts a safety conscience five star crash test rating, which fits the family friendly profile, as well as a starting sale price of $28,000, well within the range of middle income America. While I still want to see an independent review of the car itself, the Traverse, like the Flex at Ford, is the right idea coming out of a company that has been hurting up till late. Hopefully, the market is there to meet it.