"A sign of a good launch is where you go through the first 12 months,
you actually end up making more money on the car 12 months out than
you did in the first month, which is something we like to see."
BY TIM HIGGINS
FREE PRESS BUSINESS WRITER
A little over a year after its launch, the redesigned Chevrolet Malibu
is a bright spot for troubled General Motors Corp.
When industrywide U.S. sales are down 18%, the Malibu -- which
competes in the hyper-competitive midsize car market -- finished 2008
with U.S. sales up 51.5% from the year before.
A new study by J.D. Power and Associates gives GM high marks for the
Malibu launch, ranking it No. 3 among other launches in 2007. (The No.
1 vehicle is another GM product, the Buick Enclave, an important model
for the automaker but one that does not see as high a sales volume as
the Malibu, which is one of GM's best-selling cars.)
Launching a new model is important for an automaker. After a car has
been on the market a year, a company has a good indication of how
successful the vehicle will be over its lifetime.
"It's absolutely critical that you get that first year right because
that's where you're actually going to make a lot of your money and set
the standard for the years to come," said Dave Sargent, vice president
of automotive research at J.D. Power. "Something like the Malibu --
which launches very well, has very strong quality, very strong appeal
and the financial metrics look very good in the first year -- one can
anticipate that as the vehicle continues into its second, third and
fourth year those will tend to continue."
The redesigned Malibu launched in November 2007 but, as is normally
the case, took several weeks to roll out to all of Chevrolet's
dealerships across the country. The new Malibu didn't hit its full
stride until January 2008, according to GM.
In 2008, GM's U.S. dealerships sold 177,088 Malibu sedans -- 60,209
more than in 2007.
GM saw its overall U.S. sales drop 22.7% in 2008.
The automaker is racing to complete a plan to present to the federal
government showing how it can become viable long term as part of the
$13.4-billion loan-rescue plan to keep the company afloat.
"I think we had a very well-coordinated effort," said Mike Weidman,
Malibu's marketing manager. "We knew going into it that we had a big
social-acceptability issue to overcome. We knew that a lot of import-
type buyers wouldn't trust what we had to say as the manufacturer."
Because of that, GM made a big public relations push, along with a
strong effort to train dealers on how to sell the new vehicle's
The vehicle won several industry awards, including 2008 North American
Car of the Year. Last summer, the Malibu also won the award for best
initial quality among midsize cars from J.D. Power, beating the Toyota
Camry and Honda Accord. (Last year, Camry sales were down 7.7% and
Accord sales were down 5%.)
According to GM's numbers:
# The 2008 Malibu's retail share increased 3.9 percentage points over
the 2007 model.
# Its residual value, which estimates the vehicle's future resale
value, increased 9 percentage points.
# Customers' opinions of the vehicle improved by 13 percentage points.
Edmunds.com estimates that GM's average incentive spending on the
Malibu dropped in 2008 by $278 to $1,438 per vehicle, another sign of
the vehicle's strength.
Dealers rave about how the Malibu is doing so far.
"It was a well-orchestrated introduction," said Ken Thompson, fleet
and commercial manager at Classic Chevrolet in Grapevine, Texas. "The
whole thing was timed very nicely. We didn't run out of product."
Paul Stanford, president of Les Stanford Chevrolet in Dearborn, echoed
those thoughts, praising the design and quality.
"It's a great, great value vehicle," he said.
Some, however, have questioned the timing of the vehicle, suggesting
the car could have done even better in a more healthy economy.
The Malibu is built in Orion Township and Kansas City, Kan. A 17-day
labor strike at the Kansas plant pinched supplies of the Malibu last
The new J.D. Power study, called the Vehicle Launch Index, looks at a
variety of factors and measures performances against industry and
"They didn't run up a high inventory on the vehicle. They managed to
keep demand and production pretty well in line," Sargent said. "In
fact they added a third shift at the Orion plant to satisfy demand."
GM also did a good job holding the price the manufacturer charges the
dealer for the vehicle.
"In fact, it improved over the 12 months of the launch. They weren't
having to discount the vehicles to the dealers, if anything they were
actually charging more," Sargent said. "A sign of a good launch is
where you go through the first 12 months, you actually end up making
more money on the car 12 months out than you did in the first month,
which is something we like to see."