Exclusive: New Chevy Malibu's task - meet GM's aggressive sales goals

Thu Mar 26, 2015 4:13pm EDT
 
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By Ben Klayman

DETROIT (Reuters) - The Chevrolet Malibu has been a symbol of General Motors Co’s (GM.N: Quote) competitive woes for nearly 20 years due to designs that critics often lambasted as boring. Now, the No. 1 U.S. automaker is telling suppliers a redesigned version of the midsize sedan will deliver a long-awaited sales jolt.

GM executives have told suppliers to prepare for sales in North America of 250,000 new Malibus a year, 25 percent above last year’s levels, and have the ability to go as high as 300,000 cars a year, according to three supplier sources familiar with the plans.

GM declined to discuss forecasts, but last fall the company told analysts it was targeting 2016 sales of 225,000 Malibus a year.

Company officials say they expect the new Malibu to deliver $1,500 a car more profit than its predecessors. Taken together, the projections indicate GM is hoping for at least $450 million in additional profit from the car, which will be formally unveiled at the New York auto show next week. That profit would be equal to 41 percent of GM's most recent quarterly net income.

To win over skeptical consumers, GM's ads for the new Malibu will tout the car's quality, styling, fuel-efficiency, and a myriad of safety and connectivity features.

GM's sales goals for the Malibu are important, because the car is a key piece of GM Chief Executive Mary Barra's strategy for delivering 10 percent profit margins in North America, and return on capital of 20 percent globally. 

But to hit its targets, GM will have to overcome a legacy of playing catch-up in a segment crowded with strong entries, including long-time segment leaders, the Toyota (7203.T: Quote) Camry and Honda (7267.T: Quote) Accord. GM's Japanese rivals also benefit from the cheap yen to help defend their dominant market shares.

"If you're going to beat the champ, you can't just win on split decision," said Steve Hurley, owner of Stingray Chevrolet near Tampa, Florida. "You've got to knock him out. That's what the Malibu has to do."   Continued...

 
A 1969 Chevrolet Chevelle SS (R) is seen next to a 2015 Malibu LTZ on display at the GM Heritage Center in Sterling Heights, Michigan March 26, 2015.  REUTERS/ Rebecca Cook