Niches to riches for General Motors?

That's special
GM says it will boost its lineup of specialty vehicles to


  • Charge premium prices

  • Revitalize older models

  • Avoid incentives

  • General Motors thinks it has found a way to make money on domestically produced entry-level cars.

    At a recent press event, Vice Chairman Robert Lutz said the answer is to include "high-revenue variants" in planning for the Delta platform. GM plans to replace the 7-year-old Chevrolet Cavalier with a new, Opel Astra-derived Delta car in about two years.

    The small-car strategy points to an emphasis on specialty vehicles at GM. The company wants to engineer its models to accommodate spinoffs that attract performance buffs, extend the life of aging vehicles - and, most importantly, pad profit margins.

    "I strongly believe in doing a certain number of specialty vehicles to do niches - like special roadsters, convertibles," Lutz said. "That is good stuff. We have to get better, however, at doing it at a very low investment."

    New job at design

    One sign of the change afoot at GM is Mark Reuss. In June, the former vehicle line executive moved to the newly created post of executive director of operations, engineering and specialty vehicles.

    GM has tended to create variants and accessory packages after a vehicle is in production, Reuss said. Now, he says, "We're really linking the whole thing into how we put things into the portfolio and how we launch them."

    That translates to less cost in redoing factory lines and vehicle structure, he said. "We could do changes on vehicles that would be very quick, very cost effective."

    "You can get almost a completely new appearance on the car by doing a few well-placed things that would inject new life late in the life cycle," Reuss added.

    GM isn't alone in eyeing specialty vehicles to maximize revenues from platforms, said consultant Jim Hall of AutoPacific.

    Toyota is likely to load more than six variations on its New Basic Car platform, used for the Echo in the United States. Carmakers can charge a premium for inexpensive tweaks to current vehicles, Hall said.

    Specialty variations on a platform can sell for a significant premium. For example, Toyota's base 2002 Corolla lists for $13,023, including destination, but the new Matrix, using the Corolla platform and powertrain, is expected to list for about $18,000.

    Not too costly

    "A good revenue enhancement vehicle does not have a lot of additional cost for features," Hall said. "It's vehicle configurations that make it more appealing."

    The versions of the current Astra hint at directions GM could take with the Delta cars, he added. Opel makes a wagon, three-door hatchback, five-door hatchback, four-door sedan, convertible, coupe and the Zafira minivan on the Astra platform.

    But GM has been slow to move into the hot compact segment occupied by competitors such as the Honda Civic Si and the Ford SVT Focus.

    "Where's GM's entry down there?" Hall said. "They can't do anything with the current Cavalier that's going to have any credibility with the buyers, but with the next car they could."

    Reuss says GM is committed to the strategy, in part because it is tired of putting heavy incentives on aging models. The Cavalier is a prime example, with $2,500 rebates offered regionally to move the car this year.

    Said Reuss: "You've got a choice. You can say, 'We're going to put $2,000 on the hood.' Or you can do this."

    You can reach Dave Guilford at dguilford@crain.com

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