Chevrolet Malibu is helping put Detroit back on the map in the mid-size sedan segment. Even the three-year-old Pontiac G6 and Ford Fusion are helping out on that front as well.
Of course, the real Big Three of the so-called “C” segment of the market remain solidly entrenched atop it: Honda Accord, Toyota Camry and Nissan Altima. Accord was the nation’s hottest-selling vehicle during the first quarter, according to Edmunds.com data, overcoming a sluggish start since the new model’s debut last fall to move 88,000 units from January through March. Camry, at 84,000 units, and Altima, with 76,000 sales, were right behind.
But domestic automakers nevertheless are encouraged by recent glimmers of hope in a crucial segment in which they haven’t been competitive for several years — even though mid-size sedans used to be the Big Three’s bread and butter. At least the progress lately is a place to start.
First-quarter retail sales of the new Malibu, for instance, at 37,000 units, were up more than 110 percent over year-ago sales of the version it replaced about six months ago. And Malibu’s market share is 1.3 percent higher than during the same period a year ago.
Meanwhile, the three-year-old G6 posted sales of 46,000 units during the first quarter, putting it in fourth place overall in the C segment. Through March, Pontiac reported, retail sales of the G6 were up 1.2 percent over last year’s first quarter.
Fusion sales in March — about 16,000 units — were highest since the model’s introduction in 2005, according to Edmunds.com data. Full-quarter Fusion sales were about 40,000 units. Ford executives expect this momentum to keep building toward their introduction of a redesigned Fusion in early 2009.
Even more to the point is that Fusion, Malibu and G6 are making their halting progress to a large extent by taking sales away from Camry, Accord and Altima as well as the Hyundai Sonata. About 40 percent of sales for both Malibu and Fusion now are “conquest” purchases made by previous owners of non-Ford and non-General Motors brands.
“The one thing that is very clear is that Malibu just broke into the shopping list of mainstay Asian brands for new-car intenders in this segment,” said Art Spinella, president of CNW Research, an automotive market-research firm in Bandon, Ore. “I can’t think of another time in the last 10 years that a new car has done that so significantly and so quickly. We also see that a little bit with Fusion.”
All three vehicles also are helped by overall rising consumer interest in more fuel-efficient models – “largely small-car buyers moving up” to the C segment instead of leaping over it into SUVs and large cars, as more did a year ago, said George Pipas, Ford’s U.S. sales analyst. The C and D segments (think Ford Taurus and Toyota Avalon for the latter) are now up about three percentage points in their share of the total market, at about 15 percent, compared with a year ago.
Moreover, both GM and Ford recognize that the Asian makers aren’t going to stand still in face of any erosion in their C-segment dominance that is accomplished by Fusion, G6 and Malibu. Honda introduced a restyled new Accord last fall, for example, and after facing initial supply constraints on its six-cylinder engine that proved more popular with consumers than expected, Accord entered April on a healthy sales trend.
“Camry and Accord got to the level they got to over 30 or 40 years and built to it because their companies pleased customers with good small-car offerings, and lots of them,” Pipas noted. “We were basically missing in action [with a competitive C-segment car] for much of that time, and you don’t overnight re-establish yourself no matter how great your product is.”
Launched by GM audaciously last fall as “The Car You Can’t Ignore” and as a vehicle that finally would dent the predominance of Accord and Camry, the 2008 Malibu so far has managed to meet the company’s lofty expectations even in the midst of a major downdraft in the overall market.
Besides the car’s general sales growth, GM points with enthusiasm at a few specific aspects of Malibu’s strong start. For example, Malibu sales are up dramatically in three import-heavy states “where improved performance is critical to our long-term success,” said Ed Peper, Chevrolet’s general manager. Florida sales have risen 91 percent over the 2007 model year; New York sales are up 135 percent; and California sales are 186 percent above 2007 levels.
Some individual dealers in those states are reporting astounding leaps in sales of the 2008 Malibu versus the 2007 version. At Community Chevrolet in Burbank, Calif., for example, the difference is a 675-percent increase so far this year, while at Hustedt Chevrolet in Centereach, N.Y., the new Malibu’s gain is 925 percent.
What’s more, Peper said, “Malibu customers are demanding more up-level models, reflecting buyers with higher household incomes than the previous model.” Malibu’s two highest trim levels account for 42 percent of sales. And of the 40-percent-plus of non-GM vehicles that are traded in for Malibu, the No. 1 swap is a Camry. Malibu’s average turn rate is 31 days.
Peper also noted that the average transaction price for the new Malibu is just under $21,000, about $4,00 more than the previous model – and about $200 more, he said, than the average transaction price for the Camry. Buyer demographics are much richer than before, Peper added.
When it comes to retail sales compared with fleet purchases, the six-month picture is even better for Malibu, said Jessica Caldwell, an industry analyst for Edmunds.com. That’s because sales to daily-rental fleets and end-of-model bargains for consumers helped keep the previous Malibu afloat during its last year, she explained, while GM has made a point with the 2008 Malibu to refrain from allowing it to become a commodity-like staple of daily-rental fleets.
In the same vein, the new Malibu is reaching consumers’ pocketbooks without the same heavy incentives that Chevy offered on its predecessor. In 2005, Caldwell said, “it wasn’t unusual for incentives on the [old] Malibu to reach $4,000 or more.” But since last summer, she said, the Total Cost of Incentives – a proprietary Edmunds.com formula – for Malibu has been less than $2,000. And most recently, all on transactions with the 2008 version, she said, GM’s TCI for Malibu has averaged around $1,200 per unit.
“Having TCI of $1,200 to $1,400 isn’t bad, especially for a model whose average incentive spending has been so much higher,” Caldwell said.
Even online shopping traffic supports GM’s optimism. Nearly 14 percent of online consumers “cross-shopped” Malibu in February after first checking out Camry or Accord on Edmunds.com, up from less than three percent for each car last September before the introduction of the 2008 Malibu.
CNW’s surveys show that Malibu has broken into the top three vehicles of interest for new-car “intenders” who currently own Honda Accord or Toyota Camry, especially in the Northeast and Southeast.
“Typically a Honda owner, for example, would look at a Toyota and down the list might look at Hyundai Sonata,” Spinella explained. “But rarely do you see a Detroit product on there, especially so early after a product’s launch.”
Spinella said that Chevrolet’s marketing of Malibu “has been good,” but the key to breaking onto the intender lists of so many import owners has been word-of-mouth and showroom visits. “Putting their hands on Malibu was a revelation for a lot of them,” he said, “—that something GM was building had the potential to be as good as what they were driving.”
GM’s own research also shows that, in terms of features and quality, Malibu is living up to consumer expectations that naturally could be high for a vehicle that was named the 2008 North American Car of the Year, as judged by an independent panel of automotive journalists (including Edmunds.com).
The company “hope’s to earn” a Consumer Reports Recommended Buy Rating in November, said Mike Meloeny, Malibu’s chief engineer. And the car “is on track to be one of the lowest-cost warranty launches in GM North American history.”
In fact, the only immediate fly in the ointment for Malibu is a possible local strike at the GM plant in Kansas City, Kan., where Malibu is assembled. The company has some flexibility to ramp up Malibu production at its Orion Township, Mich., plant that makes both Malibu and the new Pontiac G6.
Retail sales for the G6 were up 10 percent for the first quarter compared with last year, Pontiac reported. Gains are coming from consumers who like the model’s approach to their basic concerns of fuel economy, performance, value and sharp styling, said Chris Ayotte, marketing manager for G6.
“We ran at 105 percent of our sales objective for the first quarter,” Ayotte told AutoObserver. “And we are still seing strong performance through April, and we expect to be up for the year” compared with year-to-date 2007, when April sales figures are released today.
Ayotte said that Pontiac also has boosted G6 sales with the introduction of a high-performance GXP coupe and sedan last fall. For several weeks, more than 10 percent of the orders by Pontiac dealers for G6 models came in for GXP versions, he said. “GXP is definitely growing in popularity,” Ayotte said.