Will new Chevy vehicles rev up GM?

Strong Silverado sales offset a slump in aging brands, but the automaker is betting on small fuel-efficient cars for the future.

By Benzinga Dec 2, 2011 9:58AM

Echo/Cultura RF/Getty ImagesBy Matthew Kennedy, Benzinga


On Thursday, General Motors (GM), along with other U.S. automakers, reported November sales. GM sales rose 6.9%, a slight miss from analysts' estimates of 7.4%. Sales of its Chevy Silverado pickup jumped 34%, compensating for falling sales of its aging Malibu and Impala sedans. Going forward, the company hopes to increase sales by introducing new, small, fuel efficient cars.


Chevy has historically struggled to compete in the economy car class. The previous generation featured the Aveo and Cobalt, both of which were poorly received by consumers. Automotive reviews panned the vehicles for using cheap interior plastics, having poor handling capabilities, and lacking the reliable characteristics of their Japanese competitors. Chevy followed up with the Cruze compact car, which was an improved offering but still did not present the same value proposition as that of the Ford Focus and Hyundai Elantra.


Chevy hopes to reverse this trend with its new Chevy Spark, a subcompact vehicle designed to compete primarily with the Nissan Versa and Hyundai Accent. Cars in this class have historically been overlooked by consumers. Their lack of standard features and handling dynamics amounting to a driving experience that is slightly better than riding a bike to work. However, with rising gas prices, customers have turned to smaller vehicles, and manufacturers have responded by adding more equipment and safety technology.


The Spark will be the smallest car Chevy has ever sold. It uses a 1.2 liter four-cylinder engine with an output of 85 horsepower and comes standard with a manual transmission and front wheel drive. The optional four speed automatic transmission will be the one likely be selected by most Spark buyers. Chevy also hopes to bring an electric version of the Spark to market soon, and it will likely get significantly better gas mileage than the Volt due to the car's reduction in size and weight.


The car manufacturer has recently faced criticism over reports that a Chevy Volt caught fire several days after it was used in a crash test. While the car has yet to experience such inflammatory incidents in real world driving, the company is revising its electric technology to de-power its batteries in the event of an accident.


GM shares have plummeted nearly 37% since its IPO, and incredibly strong offerings by competitors such as Hyundai and Ford (NYSE: F) have made it difficult for the company to return to its former glory. Chevy hopes that its new Spark and upcoming Malibu replacement will help to pick up sales in the coming year. If that happens, look for a potential rebound in GM's share price.


Neither Benzinga nor its staff offer investment advice, nor do they recommend that you buy, sell, or hold any security.


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10Comments
Dec 2, 2011 12:27PM
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The new Chevy Spark isn't likely to do a whole lot for GM.... But I give them credit for making it in America. No other subcompact is. And it is kind of a fun car. But it's too small for my tastes, and it came to the market way too late.
Dec 2, 2011 2:11PM
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Hmmm...I seem to recollect that Honda just had a recall today for airbags that can kill the driver.  That's a pretty bad mistake, Honda.  They also had a recall a few months ago.  All car companies have recalls.  You must have missed the nissan recall on 11/16.
Dec 2, 2011 12:35PM
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Umm, Trader8000, are you forgetting about Toyota's many, MANY recalls? Tires flying off, brakes failing, and a zillion other issues. Toyota had more recalls last year than any other automaker. They might have broke the record for recalls!
Dec 2, 2011 4:06PM
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Last four vehicles, two Silvarados an Impala and now a Malibu have been great almost no problems. Mailbu in not dated and is going to even better next year. Impala is dated but it's still a great car for a family. I for one am glad GM is paying America back am continuing to improve their lineup.

 

Dec 3, 2011 11:05AM
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y,all heard the old saying, WHEN YOU BUY A  HONDA OR A TOYOTA,YOU RIDE A MILE AND RECALL THE REST,Smile
Dec 2, 2011 5:17PM
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I hope you don't believe Chev is paying back the loan. With 15T and rising by way the money is reuse back to Obama's reelection. Where you think he is getting all this money from part time job turning hamburgers? Chev is just another government job that will take hand outs from the tax payer and still keep prices high on the consumer. Chev is a socialist taker. Is this a left wing Lib web site?
Dec 2, 2011 2:20PM
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What!? Honda airbags are killing people?
Dec 2, 2011 2:21PM
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FYI - yeah, all car companies have recalls. Toyota had THE MOST.

In Toyota's defense, GM had the most when it was number-one... But GM is semi-crappy, so that's not too surprising.

Chrysler is one of the worst, but most of its problems are cash cows for service, but not major enough to spark a recall.

Dec 2, 2011 3:24PM
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Obama chev auto vote is out to kill you. Its common sense that batteries will short out on impact or soon after. Yeah go a head and park your new vote in the garage...insure you purchase battery fire insurance and life insurance for your family. Now its time to turn that Obama car into a FORD. I smell another tax payer bail out for those pot smokers building Chev and military battle trucks.
Dec 2, 2011 12:24PM
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Maybe they can increase sales, but for as much as people have been complaining about buying foreign, I can't remember the last time I heard about a foreign car catching fire and melting as one of the flaws. Maybe buying American isn't the way to go. Sorry, GM, I'll go buy a Nissan.
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