GM leans on full-size SUVs to rebound
By Michael Ellis, (Detroit) Free Press
LOS ANGELES — Circle Jan. 12 on the calendar. The Chevrolet Tahoe officially goes on sale Thursday, and, if General Motors (GM) is to recover from its dismal 2005, the newly redesigned SUV will be a big driver in that turnaround.
Chevy showed its new Suburban at the Los Angeles auto show. Chevy showed its new Suburban at the Los Angeles auto show.
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Chevrolet has proclaimed 2006 the Year of the Truck. To back up that claim Thursday, GM showed two full-size SUVs at the Greater Los Angeles Auto Show.
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With the arrival of the Tahoe and later the Chevrolet Suburban, GMC Yukon XL and other large SUVs this year, 2006 should be better, GM executives say. They aren't the only ones who believe that.
Tonight Show host Jay Leno, who helped GM unveil the SUVs at the auto show, said that, judging by GM's new cars and trucks, the automaker is on the right track.
"I know nothing about finances. I just know about product, and I have friends asking me, 'Hey, can you get me a Solstice?' 'Can you get me a Corvette?' That's a good sign," Leno, a noted auto enthusiast, told reporters.
Lost in all the talk last year about GM's financial problems, including assertions by some Wall Street analysts that the company could go bankrupt, was the success of GM's new vehicles like the Pontiac Solstice and Chevrolet HHR, said Mark LaNeve, vice president of sales and marketing for GM North America.
GM's U.S. vehicle sales dropped 4.3% last year, and the company lost nearly $4.9 billion in North America through the first nine months of the year.
But some of its new cars that hit the market last year sold well, and with the new SUVs on the way, LaNeve is confident of better results in 2006. "We're optimistic that we're going to improve over '05," he said. "We've got a lot of new products coming in segments where we're strong."
But Mark Fields, Ford Motor's (F) president of the Americas, said at the auto show Wednesday that it would be a mistake to think that large SUVs will be big sellers this year.
He said 2006 "will not be the year of the truck."
"Fuel economy will continue to be a major factor for consumers," he added.
LaNeve agrees that large SUVs will not hit the sales highs of around 900,000 across the industry that they achieved in recent years. But sales this year should be respectable, in the range of 700,000, and GM intends to keep its dominating 60% of the segment, he said.
To back up his optimism, he noted that GM's sales of full-size SUVs bounced back from fewer than 20,000 in October, when gas prices hovered around $2.70 a gallon, to more than 42,000 in December after prices eased.
But consumers interested in trading in their old SUV for one of GM's new models might find they can't afford it. The average trade-in value last year for used midsize SUVs dropped 8.3% and large SUV values fell 13.7%, Edmunds.com reports.
To reassure new SUV buyers, GM is going to sharpen its advertising and marketing message, LaNeve said. For the last two years, GM kicked off January sales with its Hot Button giveaway of new cars and trucks.
But this year, LaNeve said, GM is going to spend less time and money touting promotions such as Hot Button and the Red Tag sale, and more time comparing how its SUVs and other vehicles measure against competitors.
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