GM needs the new midsize Buick Regal and compact Chevy Cruze to drive future profits

GM needs new Buick Regal, Chevy Cruze to be hits

DETROIT — Two General Motors cars due in showrooms next year must be hits to help the automaker turn around sales and pay back its big debt to U.S. taxpayers.

The Buick Regal midsize sedan and Chevrolet Cruze compact, both sold in key segments of the U.S. car market, face stiff competition and other obstacles to success.

GM was to roll out the Regal on Thursday in Los Angeles, and it’s counting on the sleek-looking sedan to claw out a new market for the once-stodgy Buick, now the official brand of bingo night at the senior center.

Buick has been absent from the tough midsize market since 2004, while the Cruze was recently put on hold because GM wasn’t happy with how it drove.

Executives have high hopes that the Regal, much of it designed by GM’s Opel engineers in Ruesselsheim, Germany, can help bring younger buyers to Buick, crucial to the brand’s long-term growth. Currently the median age of a Buick customer is around 68, but GM is targeting new models for those in their 40s and 50s, said Craig Bierley, Buick’s product marketing director.

“Clearly having a midsize entry is absolutely critical for us,” Bierley said.

Buick sales so far this year are down 33 percent compared with last year, worse than the overall U.S. market, which is off 25 percent.

Midsize cars like Toyota’s Camry, the perennial sales leader, are attractive to young families and baby boomers who are downsizing their vehicles. They typically can haul five people and have decent trunk space. Also, several entries get well over 30 mpg on the highway, making them the default buy for those who need space but are concerned about the return of $4 per gallon gasoline.

So far this year, the midsize segment is the biggest part of the U.S. car market, making up 47 percent of sales. Camry dominates the segment with 294,000 sales.

GM has no margin for error with the Regal or any other new vehicle, said David Koehler, a clinical marketing professor at the University of Illinois at Chicago.

“Their success in the future is riding on these new launches,” he said.

The new Regal, due in showrooms in the second quarter of next year, is aimed at those who want a car that’s fun to drive yet is practical. The Regal has three ride settings (normal sport and touring) and is smart enough to tailor the car to the way people drive, Bierley said.

The Regal is designed to compete with the sporty Acura TSX made by the Honda luxury brand, and the Volvo S60.

Pricing wasn’t announced, but it will be between the mainstream midsize Chevrolet Malibu at $21,325 and the $27,835 base price of a larger new Buick, the LaCrosse, aimed at luxury buyers.

The flabby old Regal, discontinued five years ago in part because it couldn’t compete with the Camry and Honda’s Accord, bears little resemblance to the new one, which Bierley said is equipped only with four-cylinder engines to boost fuel economy.

At first the car will have only one engine choice, a 2.4-liter, 182 horsepower powerplant that gets around 30 mpg on the freeway. By next summer, a 220-horsepower 2-liter turbocharged four with power comparable to a V-6 also will be available.

Stephanie Brinley, an analyst with the AutoPacific marketing and consulting firm, predicts that GM will sell about 40,000 Regals in its first full year, not a huge number but enough to bring critical profits to GM. Last year, Acura sold almost exactly 40,000 TSX models.

“It doesn’t really matter how many they sell of the Regal. It matters if it’s profitable,” she said.

Koehler said even more is riding on the smaller Cruze, which must sell in larger numbers than the Regal because of its lower profit margins. The Cruze will be targeted at younger entry-level buyers as well as those seeking fuel economy. It’s supposed to get around 40 mpg on the highway.

But GM postponed the Cruze’s April build date about three months, said Mark Reuss, GM’s vice president of global vehicle engineering.

The company, he said, wasn’t happy with the Cruze’s performance, especially with the six-automatic transmission.

“No one was thrilled with where it shifted, how it shifted,” he said in an interview.