Will Gm's New Cars Sell?

July 18, 1994|By Ted Shelsby | Ted Shelsby,Sun Staff Writer

WASHINGTON -- Linda Johnson handed her cone of ] Haagen-Dazs to a friend and slipped behind the steering wheel of a snow white 1995 Chevrolet Monte Carlo.

She tested the comfort of the seat, then the head and legroom, and carefully inspected the instrument panel and the car's rounded lines. Only then did a warm smile of approval slowly emerge.

"Jack Smith is doing a good job," said Ms. Johnson, a government worker from Rockville, who was among several hundred people invited to a recent private showing of General Motors Corp.'s newest line of cars.

At the door was Mr. Smith -- John F. Smith Jr., the 56-year-old president of GM -- who was all smiles as his confidence was being bolstered by the stream of compliments from his guests.

"The Aurora looks like a real winner," said one visitor, patting Mr. Smith on the back.

Although the setting this night was the chandeliered ballroom of the Hyatt Regency, a few blocks from the Capitol, and included members of Congress and government workers, it was the next best thing to the marketplace.

After closing plants, eliminating hundreds of thousands of jobs, cutting costs and going through management shake-ups, the biggest test still awaits the auto giant in the showrooms and on the asphalt lots where consumers decide whose product they will buy.

GM executives acknowledge their cars have been outdated and of poor quality for years, resulting in stunning losses of market share.

A critical part of the company's plans for a turnaround is the revamping of its entire fleet of cars and trucks. It is in the midst of one of the most extensive new model introduction programs in its history. Nine new models will come out this year, and two more are scheduled to appear in showrooms in early January.

It actually started last year with the revamped Camaro and Firebird. The all-new Cadillac DeVille and S-10 trucks quickly followed.

The new Chevrolet Monte Carlo and Lumina, Oldsmobile Aurora and Buick Riviera are now in showrooms, and by this fall they will be joined by the redesigned Geo Metro, Chevrolet Cavalier, Pontiac Sunfire and the Chevrolet Blazer and GMC Jimmy sport utility vehicles.

Early next year, GM will unveil its all new four-door full-size utility vehicles, the Tahoe and Yukon.

Chevrolet, in fact, is scheduled to introduced a redesigned model every six months through the end of the decade.

"GM has made significant gains in reducing its costs [of producing cars] and is in the process of revamping its entire vehicle lineup," said David E. Cole, director of the University of Michigan's Office for the Study of Automotive Transportation. "With fresh products and lower cost, they could do extremely well in the marketplace. They can make things tough for their competitors."

While it is too soon to accurately gauge consumer acceptance of these newest offerings, they have received favorable reviews in the automotive press. USA Today, for instance, called the Lumina "the best Chevy in years." Road & Track called the Aurora "the finest new Oldsmobile to come down the assembly line in many a decade."

Michael P. Ward, who follows GM for Kidder, Peabody & Co. in New York, agrees that the jury is still out on its latest models. "The cars they introduced last year are doing extremely well."

But as for the newest models, the Lumina, Monte Carlo, Aurora and Riviera, "We probably won't get a clear indication on how well these cars are going to do until January," he said. He said the Aurora could help the Oldsmobile division, but it won't rescue GM. "The volume is too small."

The analyst said the Lumina and its two-door version, the Monte Carlo, offer "a fresh new design," but he is not certain they represent enough of a leap in design and technology to make a big impact in the extremely competitive midsize car market.

But, Mr. Ward added, they will benefit greatly from the most powerful distribution systems in the auto industry.

"Yeah, I think they can make it in the marketplace," he said, "but it is not going to happen overnight."

While GM's future looks better than it has for several years, Mr. Smith dismisses any suggestion that the company can ever return to the days when it controlled 50 percent of the U.S. car market.

"Our plan is to gradually increase our market share . . . If you get great cars into the market, you're going to get market share. So our focus is on getting great cars into the market," Mr. Smith said.

There are signs that this strategy is beginning to pay off: The new models are being favorably received, according to J. Michael Losh, the newly appointed executive vice president. Mr. Losh said that retail sales, which do not include the less profitable or, in some cases, money-losing fleet sales, are up 11 percent for the first six months of 1994. "This compares with an industry growth of 7 percent during the same period."

And for the first time since 1989, Pontiac is outselling Toyota in the United States.

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