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GM's past and present collide in sibling rivalry

The sharply styled, highly promoted Malibu is outsold by the similar-sized but simple, uninspired Impala. Which one will survive the struggling automaker's restructuring?

February 16, 2009|Ken Bensinger

For a year, General Motors Corp. has been singing the praises of the new Chevrolet Malibu, voted the 2008 North American Car of the Year by auto writers and billed by GM Chairman Rick Wagoner as "the finest midsized car this country offers." To promote its launch, GM spent nearly $250 million on advertising, dubbing it "the car you can't ignore."

Meanwhile, GM has been quietly making and selling a similarly sized and priced sedan: the Chevrolet Impala. GM hasn't run a national ad for the full-size Impala in three years, scarcely mentions it in news releases or conference calls with Wall Street analysts, and made little hay about its winning Fleet Car of the Year three years running.

Yet last year, for every two Malibus that GM sold, it delivered three Impalas. Unpromoted, hardly noticed, the humble Impala finished the year with 265,840 sales, making it the best-selling U.S. sedan and the No. 8 vehicle by volume in the country, outselling even the Dodge Ram pickup by a wide margin.

On Tuesday, GM will submit a restructuring plan to the Treasury Department, a document that is supposed to explain how it intends to reduce debt and cut costs and prove it merits further government financial support beyond the $9.4 billion in federal loans it has already received.

Exactly how the federal government will assess plans offered by GM and Chrysler remains uncertain. But Sunday, Obama administration insiders said there no longer were plans for a "car czar" to oversee restructuring. Instead, an interagency task force was in the works that would include two senior presidential advisors.

Treasury Secretary Timothy F. Geithner and National Economic Council Director Lawrence H. Summers will oversee the across-the-government panel, a senior administration official told the Associated Press on Sunday on condition of anonymity.

Even with more help from Washington, industry experts question whether cost-cutting and debt reduction will be enough to save GM. They say the outsize company has deep-rooted structural problems, with too many dealers, too much production capacity and too many models, leading to cost problems that destroy any chance of making a profit.

The Impala and the Malibu, which sit next to each other in many Chevy showrooms, provide a window into those problems and how difficult saving GM really might be.

"Symbolically, these are cars that separate the old and new General Motors," said Jesse Toprak, senior analyst at "If they want to change the way they do business, the Impala may have to go away. But how do you turn your back on a car that sells so well with so little effort?"

Old versus new

If the Malibu -- a sharply styled car developed to do battle with the Toyota Camry and Honda Accord and change the automaker's public image -- represents the new GM, the Impala would seem to be a dinosaur, left over from the bad old days when GM cars were known as rolling rust buckets.

Built in Canada on a 20-year-old platform, the current Impala debuted in late 2005 and was designed to rival vehicles like the Toyota Avalon. With a simple, uninspired interior and unflashy design, it has been described by reviewers as conservative, cheap and bland. GM executives have said they purposely designed it as a car that wouldn't turn heads.

Indeed, its generic styling, 29-miles-per-gallon highway fuel economy and user-friendliness (buyers can even choose bench or bucket seats) make it popular with police, car-rental companies and other commercial customers.

Ed Peper, general manager of Chevrolet, said more than half the Impalas GM sold last year were part of so-called fleet sales, compared with roughly 20% for the Malibu. He calls the Impala "very profitable," even though fleet sales are often made at a discount and can put pressure on retail pricing.

Yet when the Impala does make it into dealership showrooms, the car it competes with most directly appears to be the Malibu. Data from the website shows that as many as a third of Impala owners thought about buying a Malibu, far more than any other car.

And although the Impala's sticker price is more than $3,000 above the Malibu's, the two vehicles sell for nearly the same price after incentives -- between $19,000 and $22,000 -- according to data from J.D. Power & Associates. Considering that the Impala offers more trunk space and headroom, many consumers choose the bigger car, dealers say.

"They probably would have been able to sell many more Malibus if not for the Impala," said George Peterson, president of the research firm AutoPacific. He argues that vehicles like the Impala overextend GM's resources.

A study AutoPacific released last week shows that GM's 60 models averaged fewer than 50,000 sales apiece last year, compared with an average of 102,000 for each of Honda's 14 models.

To become a profitable company, he argues, GM should eliminate more than two dozen models and half of its U.S. brands. "They have too many products, and some shouldn't exist," Peterson said.

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