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GM Takes Aim at Small-Car Market

The auto giant will introduce seven new vehicles over the next four years in a bid to recapture customer base.


LAS VEGAS — General Motors Corp., long criticized for abandoning the small-car market to import brands, said Tuesday that it will introduce seven new small cars and trucks in the next four years.

Although presented as a bold and aggressive new entry-market strategy by GM North America President Ronald L. Zarrella, the plan he outlined was greeted with skepticism by some in the auto industry audience, gathered for a J.D. Power & Associates round-table program.

GM, which has steadily lost market share in the last decade, has introduced and then abandoned several market-building initiatives.

"We'll have to wait and see" about the effectiveness of the small-car program, said Mark Rikess, a Los Angeles-based auto consultant whose firm operates several GM dealerships.

Zarrella acknowledged that GM has for years ignored the small-vehicle market as it struggled to rebuild its light-truck lines, which also had fallen behind the competition. Beefing up the truck segment, he said, was critical because "you make your money in trucks these days."

But with trucks now accounting for 50% of GM's products, Zarrella said, it is time for the world's largest auto maker to focus attention on the small-vehicle segment. GM's lapses, he said, have cost the company the loyalty of many younger consumers.

"Some people believe we've given up on the entry-level market because of the financial and competitive challenges," Zarrella said. "But over the next four years, we will attack this segment with the same discipline and dedication we applied to the truck market."

The goal is to boost the company's North American small-vehicle sales to a million units a year from the current 850,000, he said.

But GM will not spend as much money on that segment as it did on its truck program, Zarrella added.

Instead, the company intends to share platform and product development with strategic partners including Isuzu Motors Ltd. and Suzuki Motor Corp. of Japan, as well as wholly owned subsidiaries such as Germany's Opel.

Zarrella said the plan calls for GM to revamp four small vehicles--the Saturn S-Series sedan and coupe, the Chevrolet Cavalier and the Chevrolet S-10 pickup--and add three new models. The proposed new entries are a Saturn sport-utility vehicle due next year and two vehicles from Chevrolet and Pontiac that will blend features of cars and SUVs.

Just as it was forced to scurry to catch up with rivals Ford Motor Co. and DaimlerChrysler in the truck market, GM now is playing catch-up in the small-vehicle segment. Ford's Focus has become the world's best-selling small car and Chrysler dealers can't keep the company's PT Cruiser in stock.

Further, importers such as Hyundai and its Kia affiliate, their rival South Korean auto maker Daewoo and German giant Volkswagen have all scored sales gains this year while GM's small-car sales are down 11%.

GM intends to fight back, Zarrella said, by producing cars that will capture "the hearts, minds and pocketbooks of an increasingly fragmented customer base."

New small vehicles from Chevrolet, Saturn and Pontiac will include mainstream cars and trucks; sporty "driver-oriented" models and "lifestyle" vehicles that "defy categorization," Zarrella said.

GM shares rose $2.25 to close at $62.13 on the New York Stock Exchange.


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