Malibu Shows Road to Revival Is Bumpy

[Z-06]

Wall Street Journal

Malibu Shows Road to Revival Is Bumpy

By KEVIN HELLIKER and JOHN D. STOLL KANSAS CITY, Kan. -- With his teenage daughter needing a car, Robert Neighbour expects to buy a Toyota Camry. Never mind that the new Chevy Malibu -- built just a few miles from his home -- bested the Camry in a recent reliability survey.

"Toyota has just more consistently done a good job," says Mr. Neighbour, a suburban Kansas City computer-systems analyst.

Track the history of the Chevy Malibu with key dates and photos.

His skepticism about Chevys represents one of the biggest issues facing General Motors Corp.: Even when GM builds a prizewinner, many Americans still favor a Toyota or Honda. As the latest Malibu collected honor after honor -- including a recommendation from Consumer Reports -- the Toyota Camry outsold it 437,000 to 177,000 last year in the U.S., according to Autodata Corp.

"A perception of inferior quality is the most serious problem facing GM," aside from its financial predicament, says David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.

This week, the Obama administration cited the redesigned Malibu, which hit showrooms in late 2007, as evidence that GM is making higher-quality cars. Under President Barack Obama's restructuring proposal, the government would negotiate or impose severe cost cuts and debt reductions on GM, enabling cars such as the Malibu to pave a new path to profitability.

But the government can't impose upon car buyers a belief that GM makes worthy vehicles, even as the company prepares to roll out a host of new designs. In the next few days, GM plans to introduce a new Camaro also refashioned in hopes of reviving Chevy's lost mojo.

Here in Kansas City, GM's problem is especially evident. The largest taxpayer in Kansas City, Kan., is the GM assembly plant that makes the Malibu. It employs about 2,500 workers and supports at least twice that many jobs at local suppliers.

The Malibu is also a source of local pride: Among auto-assembly plants in North America (including Toyota Motor Corp. and Honda Motor Co. factories), the Kansas City GM plant consistently ranks among the most efficient, according to the Harbour Report, a highly followed analysis of auto-making efficiency. Last year the plant ranked third in overall quality among 67 auto-assembly plants in North and South America, according to the most recent J.D. Powers & Associates quality report. It was bested by two Toyota plants.

Yet even buyers here remain unconvinced. Last year, shoppers in metropolitan Kansas City bought nearly twice as many Camrys as Malibus -- 2,185 to 1,262, according to R.L. Polk & Co.

Despite the local economy's stake in the Malibu, Terry Ruby, a retired Kansas City investment adviser, didn't even consider buying one before opting for a new Toyota sedan last year. "I'm satisfied with Toyota, and I don't think the American cars are equal yet," Mr. Ruby says.

This problem can't be fixed overnight. It took decades for Toyota and Honda to steal big chunks of the market from GM, and it would require years for GM to steal it back -- as rival Ford Motor Co. has learned. The percentage of Ford vehicles on the recommended list of Consumer Reports rose to 70% in 2009 from just 26% in 2002. But Ford has yet to witness any dramatic gain in market share.

"It takes word of mouth," says Bennie Fowler, vice president of global quality for Ford. Still, he predicts: "It won't be long before a Ford vehicle takes its rightful place in the customer's garage."

The problem is, the U.S. auto industry is in no condition to wait very long for buyers to come back. Auto makers are on pace to sell just a little over nine million vehicles in the U.S. this year, a steep decline from the 16 million cars and light trucks they sold in 2007. The sales decline represents the output of roughly 24 auto plants.

In a twist, though, the current financial crisis could actually play in GM's favor. A just-released R.L. Polk & Co. survey of 713 vehicle owners found that 72% were extremely, very or somewhat likely to "consider buying a domestic vehicle to support the U.S. economy."

Despite the inability of Rick Wagoner, GM's former chief executive, to lower costs dramatically enough -- leading to his forced resignation -- the auto maker significantly improved quality on his watch. Just this month, an influential J.D. Power & Associates study found GM's Buicks to be the most reliable vehicles. (Buick shared that honor with Tata Motor Ltd.'s Jaguar brand.) Toyota's Lexus brand was dethroned from the top spot, which it had held for 14 years.

More honors are coming, predicts Jamie Hresko, GM vice president of global quality. When the annual J.D. Power study of new-car quality emerges June 22, "we'll have a handful of products pass Toyota for the first time," he says.

J.D. Power says its survey isn't complete. A Toyota spokesman says, "It's premature to be calling that race." The Toyota spokesman adds that though the Malibu beat the Camry in that initial-quality survey last year, "Quality is a marathon, not a sprint."

Obama administration officials find the Malibu and Buick honors especially encouraging because they involve cars instead of fuel-guzzling trucks or sport-utility vehicles. Since 1980, the percentage of GM sales coming from trucks has risen to 57% from 22%.

"GM earns a disproportionate share of its profits from high-margin trucks and SUVs and is thus vulnerable to energy cost-driven shifts in consumer demand," said the administration's summary of GM's business prospects, which called for a shift to fuel-efficient cars.

The hope for the Malibu is that it will launch a new era of car supremacy at GM's flagship brand, Chevrolet, which accounts for nearly 60% of the auto maker's sales. Once primarily a purveyor of cars, Chevrolet now gets two-thirds of its sales from trucks.

With GM planning to downsize, kill or sell Pontiac, Saab and Saturn (all primarily car brands), any GM turnaround will depend greatly on recapturing the glory days of cars at Chevrolet.

The redesigned Malibu is the latest iteration of a nearly decadelong effort by Chevy to improve its cars' image. The next wave will arrive in coming weeks with the relaunch of the sporty Camaro, as well as the unveiling of the compact Cruze and the electric-powered Volt. GM officials say each of those cars will have undergone a design and engineering process as rigorous as did the 2008 Malibu.

"The Malibu was a turning point," says Gary Kovacic, the engineer who oversaw the redesign.

A signature of the heyday of Chevy cars, the Malibu was introduced in 1964 as the fanciest option on a variety of Chevy body styles: two-door coupes, convertibles, four-door sedans and eventually station wagons. Stylish, powerful and well-appointed, the early Malibu remains a hot item among classic-car collectors. In 1983 it was phased out as gas-guzzlers lost popularity and as Chevy moved deeper into the truck market.

In 1997, Chevy reintroduced the Malibu, hoping it would become a star in the largest category of vehicles in the U.S., the midsize sedan. In this category, buyers wanted fuel efficiency, reliability, low price, safety ratings, and ideally, pizazz.

Year after year, the boxy Malibu received mostly lukewarm reviews. The Malibu offers "little in the way of luxury or road-going excitement," said a Cars.com review in 2003, which found the car "acceptable" in a category where the Toyota Camry and Honda Accord were widely hailed as exceptional.

The Malibu's makeover was the brainchild of Robert Lutz, who before joining GM in 2001 as vice chairman of global product development had displayed a flair for conceptualizing appealing vehicles at Chrysler, such as the low-slung Dodge Viper two-seater, and Ford, where he helped create the Explorer SUV.

After arriving at GM, he convened a team of designers, engineers and marketers and ordered up a redesign of the Malibu. He wanted it to be a star. "That meant rich, beautiful exterior design. An interior better than any offered by the Japanese 'Big Two,' " Mr. Lutz recalls in an email. Other qualities he wanted to see: good handling and "great" fuel economy.

Leaders of the team say Mr. Lutz made clear that the goal wasn't to improve upon the existing Malibu but to beat the competition. Their assignment was to create a car with a base price starting just above $20,000 but with the look and feel of a luxury sedan.

They spent weeks studying the Camry and Accord looking for weakness to potentially exploit. They studied the low-end products that fashion designers were crafting for Target Corp. discount stores, in search of secrets to a luxurious look at non-luxury prices.

From the study of the Camry and Accord, Mr. Kovacic says he concluded that they were either "too loose or too crisp in their handling," giving the Malibu a chance to try to identify a sweet spot in the middle. The designers also added features usually found on luxury cars, such as chrome trim and "ambient" interior lighting that casts a more muted glow, as opposed to the harshness of an overhead lamp. They spent months rounding off the edges of the exterior in search of what lead designer Clay Dean calls "nobility."

Meanwhile, engineers spent weeks silencing vibrations, buzzes and engine noise -- a criticism of the previous Malibu. They also spent weeks trying to strike the right balance between a crisp and a comfortable ride. Too "comfortable," and the steering and suspension can feel mushy. But crisp, taut handling can make for a bumpier ride. In fuel efficiency, the four-cylinder Malibu just squeaked past the Camry.

Critics heaped praise. "The new Malibu is arguably one of the best cars GM has ever designed and built," says Ron Harbour, an industry consultant. A Kelley Blue Book review said it looked like a $40,000 car. "This vaults Chevrolet straight to the top of the mid-sized sedan game," it said.

GM officials say they knew it wouldn't shoot to the top of the marketplace, for several reasons. The economy was tanking. Sales of the previous Malibu had declined sharply in recent years, forcing the auto maker in 2007 to sell 40% of its units to rental agencies -- which had the effect of flooding the used-car market with many almost-new Malibus recently, since rental cars are retired quickly. In addition, buyers are often disinclined to purchase a new or redesigned model in its very first year, before kinks are worked out.

"It takes a long time to break through," says GM spokesman Dee Allen. "We have trouble getting people to even give the Malibu a try."

Still, the redesigned Malibu sold more than 50% more units last year than in 2007. Its share of the midsize sedan market rose to 8.4% from 5.7%, while the Camry and Accord percentages remained flat at about 21% and 17.5%, according to GM. Sales to rental customers dropped to 27% of the total. That's still dramatically higher than the Camry or Accord, but GM says it limited rental-fleet sales in 2008 to the top-of-the-line Malibu, as a marketing move.

That approach may have worked on Ted Beringer. The Kansas City-area teacher had expected to replace his 2007 Camry with another Camry until a rental agency placed him in a redesigned Malibu. "Next time I buy a new car, I will definitely give the Malibu a test drive," he says.

Meanwhile, GM is using all the awards the Malibu garnered in its advertisements, a tactic Toyota and Honda have used against it for years. It worked for Kansas City banker David Kenny. A longtime Toyota buyer, he had just assumed he would buy a Camry last year when he and his wife decided to get a new sedan.

But the various honors lavished upon the new Malibu prompted them to give it a test drive. To their surprise, they preferred it. They bought one last August.

That kind of story gives the 77-year-old Mr. Lutz, who is retiring at the end of this year, hope for the future of GM. "Malibu, I think, has begun to break through the 'negative awareness' barrier," he says.

[Intrepidation]

On the one hand you have to be pissed at people's blatant ignorance. On the other you have to acknowledge that Detroit did this to themselves. I mean, anyone who's ever driven or ridden in the N body Malibu knows its a pile of $h!. The last gen wasn't a whole lot better, although it was uglier.

[hyperv6]

I read this in yesterdays issue.

IT is a true fact and not one GM did not know going in. You will have to earn your way back.

I know GM knew it would take one generation of this car to win some creed and in time people will come back. The problem is now the Economy has hurt them on the time front.

The story on Ford worring about GM and Chryslers Bankruptcy giving them an advantage over Ford already signed deals is a good read as is the story on how thw prepackaged Chapter 11 is no walk in the park as many think it is in down economic times as this.

I for one know the truth on the Malibu and was glad I bought one for my Mother. She loves it and it has been a sold problem free driver all the way. I never thought I would like it till I got to sped some time behind the wheel and at that point I would gladly give her my GTP for it.

Edited April 2, 2009 by hyperv6

[DBeaSSt]

Our 09 Malibu is going in for it's first oil change Saturday. 8,000ish miles since we bought it new years eve. Not a single issue so far. I really can't find anything on this car to complain about.

.....A Toyota spokesman says, "It's premature to be calling that race." The Toyota spokesman adds that though the Malibu beat the Camry in that initial-quality survey last year, "Quality is a marathon, not a sprint."

And he's right too. GM simply MUST make EVERY new vehicle as good (or better) in its segment as the Malibu is against the camry/Accord. AND they have to maintain their quality for a lot longer than the first 90 days.

[Drew Dowdell]

To everyone who sneers when I suggest a Malibu over a Camry/Accord/Altima I always say, "At least go test drive it so you know you make an informed decision.". I'm confident the Malibu has a chance to win people over if they'd just get through the Chevy dealer door. If they still choose an import, well that's their choice, but at least they gave the Malibu a swing and didn't dismiss it outright without even trying.

[Z-06]

I hope GM updates it and keeps it fresh till EPII fills the shoes in.

[gm4life]

To everyone who sneers when I suggest a Malibu over a Camry/Accord/Altima I always say, "At least go test drive it so you know you make an informed decision.". I'm confident the Malibu has a chance to win people over if they'd just get through the Chevy dealer door. If they still choose an import, well that's their choice, but at least they gave the Malibu a swing and didn't dismiss it outright without even trying.

Exactly, someone I told ended up buying one instead of a Camry.

[Intrepidation]

I hope GM updates it and keeps it fresh till EPII fills the shoes in.

Yeah, I hope it doesn't rot on the vine like so many other products do.

[Croc]

To everyone who sneers when I suggest a Malibu over a Camry/Accord/Altima I always say, "At least go test drive it so you know you make an informed decision.". I'm confident the Malibu has a chance to win people over if they'd just get through the Chevy dealer door. If they still choose an import, well that's their choice, but at least they gave the Malibu a swing and didn't dismiss it outright without even trying.

Agreed. The base engine is pretty anemic, but it is smooooooooothe. The only other gripes I have are 1) no available rear armrest and 2) side mirrors are difficult to adjust properly. I always felt like I needed to turn my head to see if it was clear to make a lane change to the left, and I don't have to do that in my Aurora. But the interior is fantastic, and everything else is pretty good to great.

[hyperv6]

Agreed. The base engine is pretty anemic, but it is smooooooooothe. The only other gripes I have are 1) no available rear armrest and 2) side mirrors are difficult to adjust properly. I always felt like I needed to turn my head to see if it was clear to make a lane change to the left, and I don't have to do that in my Aurora. But the interior is fantastic, and everything else is pretty good to great.

Never had issues on the mirrors. They work fine for me. Besides after her 97 Lesabre mirros they are like truck mirrors.

The center console cover slides forward to make a arm rest. Neat feature that few know about till you are in the car for a while. Or read the owners manual.

The one complaint I have is a good one. The 6 speed tranny is too smooth for the paddle shifters on the steering wheel. You really have to keep en eye where you are as often if you shft by feel your 2 gears behind.

The 3.6 is great and with DI should get a little bett mileage.

Suspension tune is great it rides better than my GTP even with 18" wheels. While it may lack the very limit handiling my GTP has it is so much better and easier for daily driving. It goes confidently where it is pointed.

the one weak area for material in the interior is the plastic. It still has a little more hard plastic in places I wish it had better. It looks cheap around the door speaker. But to be fair it is as good or better than the Camry or Accord.

For the money this is the best car in class with a V6. I can not comment on the 4 cylinder having not driven one in this car. But I do have a LNF Turbo Eco in my car and I love it. The Turbo engine may make a intersting option that could improve mileage?

The Key gor GM is to build on this car. Each car to come along needs to beat the Malibu or last Chevy model in Quality, Styling, Feel and Value. Hyundia is now chalolanging moany because of these factors.

The bad quality rep was earned over a long time and has to be earned back one car at a time. This takes a while and GM doed not have forever. At least the sales have gone to levels most Chevy cars or any GM car sells at so someone has crossed over.

I do agree to put some of these in fleet rental units only as top models to shine. Too often you get a Enterprise car that is a crappy entry level car like the Cobalt I had where it did not even have remote door locks. Talk about bad impressions.

[the_yellow_dart]

To anyone who won't consider GM I just tell them the story of my father. Burned by a '77 Corolla, he hates Toyota to this day and vowed 'never again'. Then I ask them - If you think that's silly, then isn't it just as silly to continue to blame GM for their mistakes too?

[GMTruckGuy74]

In 1983 it was phased out as gas-guzzlers lost popularity and as Chevy moved deeper into the truck market.

Wow... the media can't get off this topic. GM = trucks, plain and simple. While the '80s introduced the truck & SUV to the masses more, it was Ford that grabbed the market by the horns with the Explorer in the very late '80s. GM caught up in the '90s, as did most of the other manufacturers. I'm not saying the the '82 S10/S15 pickups and the '83 S10 Blazer/S15 Jimmy didn't earn some truck & SUV business for GM, but that sentence makes it seem that the Malibu moved out for these trucks to move in. Now if the writer wanted to say that the full-size, BOF sedan was phased out in the mid-'90s for more trucks, then I wouldn't complain becuase that is the truth. But saying 1983??? Come on!! Now they're really reaching.

[Intrepidation]

To anyone who won't consider GM I just tell them the story of my father. Burned by a '77 Corolla, he hates Toyota to this day and vowed 'never again'. Then I ask them - If you think that's silly, then isn't it just as silly to continue to blame GM for their mistakes too?

That's pretty clever!

[BuddyP]

but GM says it limited rental-fleet sales in 2008 to the top-of-the-line Malibu, as a marketing move.

Smart move! I've thought this for years after driving bottom of the line domestics when renting cars in the past.