What the new Chevy Malibu says about GM’s turnaround

April 3, 2015, 2:57 PM UTC

Think of the new Chevrolet Malibu as a referendum on the management of General Motors (GM).

If Malibu gains ground against competitive midsize family sedans such as the Honda Accord, Toyota’s (TM) Camry, Nissan’s Altima, and the Ford (F) Fusion, then it’s fair to assert that GM is a “new” company. The old GM, reorganized under bankruptcy by the U.S. government, is gone.

If, on the other hand, Malibu struggles, it’s fair to question whether Mary Barra, chief executive officer, and the board of directors at the automaker have restructured an automaker into one that’s fundamentally different than the GM that failed in late 2008 under the leadership of Rick Wagoner.

From all appearances, the Malibu introduced Wednesday at the New York International Auto Show has the potential to be a winner.

Its design won praise from a variety of reviewers, its fuel efficiency rating is competitive, it featured ample room in the back seat (a notable flaw in its predecessor), and it can be equipped with all the latest safety features, such as Forward Collision Alert.

Malibu was “designed not to be boring,” said Alan Batey, head of GM’s Chevrolet division. And it’s not, at least from appearances.

Midsize family sedans such as the Malibu, and the others, remain the heart of the U.S. automobile market, the biggest single segment comprising 2.4 million of the 16.5 million vehicles sold in the U.S. last year. The Malibu came in sixth, behind Hyundai Sonata, with about 188,000 sales — less than half number of Camrys sold by Toyota dealers.

Previous generations of the Malibu weren’t designed to be unexciting. Nor were they meant to fall short of expectations. Yet they have bored and disappointed a significant segment of the American car buying public that increasingly has drifted toward Japanese competitors, and even to Ford’s midsize Fusion. The only venue the Malibu seemed to dominate was airport rental-car lots.

Theories abound as to how and why GM designers and engineers have been unable to achieve parity in the critical midsize segment.

Perhaps GM’s “committee” mentality — which allowed faulty ignition switches to be installed in so many GM vehicles — was the culprit. Could committees of designers and engineers have failed to push hard enough, or perform intently enough, to attain excellence?
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Barra has spoken openly about the need to change GM’s culture to one of accountability and responsibility. She insists that positive change has happened. Unlike her predecessors, who brought mainly financial backgrounds to the job, she is a qualified engineer and a car geek, fully cognizant of the qualities that Malibu must possess to compete effectively against Camry.

Mark Reuss, executive vice president of product development, remarked in New York that he “hates” the word compete, that he intends for Malibu to win. He’s sincere, although the press and public have heard similar sentiments from previous generations of GM leaders.

“Attractiveness only gets the Malibu halfway there,” said Eric Ibara, director of Kelley Blue Books residual value analysis. If GM builds too many cars in relation to demand or fails to price or promote the car appropriately, it could fail for reasons unrelated to its innate value, Ibara explained.

In other words, GM also has to correct many of its business practices for Malibu to perform competently. In that case, Barra will be able to claim validly that GM is, indeed, a different company.
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