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Chevy will carry GM's green flag
Can going green help Chevrolet gain traction in California?
That's General Motors Corp.'s thinking. The auto giant announced plans at the Los Angeles Auto Show this week to make its Chevy brand the flag bearer in GM's quest to be the world leader in fuel economy and alternative powertrain technologies.
GM is counting on a Chevy lineup that includes the economy-class Aveo, the new Malibu hybrid and the Volt plug-in hybrid -- a mix seemingly tailor-made for eco-conscious California drivers.
"We definitely think this will help us," said Ed Peper, general manager of the Chevrolet division, who was in town for the auto show.
Peper said he had particularly high hopes for the redesigned 2008 Malibu, a mid-size sedan that is going head-to-head with the Toyota Camry and Honda Accord, the two best-selling cars in the category.
The new Malibu has been getting strong notices from reviewers, and the hybrid version gets an Environmental Protection Agency-rated 32 miles per gallon on the highway and will begin rolling into showrooms in January.
"We think the Malibu will be a game-changer for us out here," Peper said.
GM's concern about the West Coast cachet of the brand that accounts for 58% of its sales is understandable. In recent years, California has been a not-so-golden state for Chevy.
The brand -- in a virtual tie with Toyota for the title of No. 1 nameplate in America with a 14% market share -- sells one-third as many cars in California as its Japanese rival, according to figures from data tracker AutoCount. With a 7.6% market share through the first three quarters of 2007, Chevy ranks fourth behind Toyota/Scion, Honda and Ford in California. Worse, that's down a full percentage point from a year ago.
There are bright spots. The Corvette is the top-selling sports car in the state, according to AutoCount, and Chevy sells more of them here than anywhere else. The brand also boasts the state's best-selling large sport utility vehicle in the Tahoe, and the Chevy Silverado is No. 2 among full-size pickups behind the Ford F-Series.
But Chevy has lacked strong California contenders in several key segments, including mid-size sedans, subcompacts and hybrids.
"We need more hybrids and we need smaller hybrids," said Pete Johnston, owner of Pete Johnston Chevrolet-Cadillac in Paso Robles. "People want them, and right now we don't have them."
Toyota Motor Co. dominates the hybrid market with its top-selling Prius, which gets an EPA-rated 45 mpg on the highway and has accounted for 2 of every 3 hybrids sold in America this year. That shouldn't discourage GM, one analyst said -- even in California, where the Prius has become an environmental status symbol.
"Who isn't behind Toyota right now in hybrid sales?" asked Jeffrey A. Foltz, editor of California Auto Outlook. "Honda is. Nissan is. There's plenty of opportunity for growth, and I don't think Toyota has a stranglehold on it by any means."
Chevy made waves at the L.A. Auto Show when it introduced hybrid versions of the Silverado and Tahoe featuring GM's advanced two-mode hybrid transmission system. Developed in partnership with Daimler, Chrysler and BMW, the two-mode system is considered by many analysts to be superior to Toyota's hybrid technology when it comes to powering big vehicles that need hefty towing and cargo hauling capabilities.
The hybrid Tahoe's 21-mpg city mileage isn't exactly eye-popping, but it's 50% better than that of the nonhybrid version of the truck and was enough of a step forward to garner the Tahoe the Green Car of the Year award.
Then there's the Chevy Volt, the plug-in hybrid that GM plans to begin road testing next spring. Plug-ins improve on existing hybrid technology by providing significant electric-only driving range and the ability to recharge the batteries overnight using a household outlet.
GM is projecting a 40-mile electric-only range for the Volt and says it will have the car in showrooms by 2010 -- provided that the lithium-ion batteries developed for the car perform as expected. Both are aggressive goals that have raised eyebrows in the industry and would put GM well ahead of Toyota and other rivals.
For the company that is still remembered in California for its role in the rise and demise of the state's electric-car initiative a decade ago, being first to market with a viable plug-in hybrid would be quite a coup. Forty miles of electric driving would allow many motorists to make their daily commute without using a drop of gasoline.
"The Volt is an opportunity for GM to leapfrog the competition" in California, Foltz said.
GM also likes to boast that it already produces an array of vehicles that get 30 mpg or better on the highway, including five Chevys -- the hybrid and standard Malibus, the HHR wagon, the Cobalt subcompact and the economy-level Aveo. Overall, however, GM still lagged behind Toyota, Honda Motor Co. and Nissan Motor Co. in passenger-car fuel economy in the most recent EPA rankings.
Alternative fuels are also part of GM's eco-friendly strategy. Beginning next year, about 60 Chevy Equinox SUVs powered by hydrogen fuel cells will be on California roads in the biggest test so far of fuel-cell technology.
Such efforts are heartening to dealers like Johnston.
"GM is very much aware of what needs to be done in this market, and I'm sure that they'll do it," he said.
The automaker still faces an uphill climb in luring California motorists away from Asian-made vehicles, analysts say. It took years for Chevrolet to lose its edge in the Golden State, and it will take years to get it back.
GM "is really in the ditch here" in terms of its environmental image, said Jim Hossack, an analyst with AutoPacific Inc. in Tustin.
Trying to regain market share by pushing fuel economy, hybrids and alternative fuels "is a good effort and they are right to try, but I wouldn't expect major progress in less than four years," Hossack added.
"If they can do it in 10 years, they've done a helluva job. If they haven't done it in 15, they're not going to do it."