After a rough 2006, General Motors
The move is designed to pump up car buyers and demonstrate to investors that the automaker's turnaround is in earnest. So does the new Malibu achieve these objectives? The car shouldn't make investors ecstatic about GM's prospects, but there are some good signs here.
The new Malibu is pretty good looking -- it's certainly more stylish than the previous incarnation. Unfortunately, "pretty good looking" isn't going to generate fire in the bellies of either car shoppers or investors. The Journal article implicitly highlights the car's weakness. It describes it as looking "German, with an exterior profile and proportions similar to a Volkswagen Passat," and it notes that GM engineers copied not only the features but also the specifications of Toyota's
Nevertheless, from a broader strategy standpoint, GM has the right idea. It is wising up to the notion that relatively minor touches can make a big difference. For instance, the car will be quieter inside; it will feature side curtain airbags and stability control as standard features; and it will have softer, more attractive interior colors and ample storage. These are all major selling points for prospective buyers. The company's product-development guru, Bob Lutz, acknowledges that these features will raise costs, but he makes the reasonable argument that the new touches will help GM lower incentives by more than the cost of the features themselves.
Granted, the Malibu won't address the most profitable market segment, but it's in this area that major carmakers' brands are made or broken. Japanese automakers' sterling quality reputations owe a lot to their success in mass-market vehicles. If GM can achieve a small victory in this area by, say, holding market share and/or garnering some positive reviews, it could create a ripple effect that translates into better sales across all product lines.
The new year probably won't bring about GM's renaissance. But the new Malibu may help it turn a corner.
For related content:
How is GM faring in the Fool's new stock-rating community? See for yourself at Motley Fool CAPS, and enter your own opinion. It won't cost you a penny.
Fool contributor Brian Gorman does not own shares in any of the companies mentioned.