GM’s Corsica, Beretta Fight Off Imports : Success in Marketing New Compact Line Gives GM a Much-Needed Pick-Me-Up
Things have been going so badly for General Motors that it seems as if the world’s largest auto maker is not just under a dark cloud, but blanketed by an overcast sky.
Yet there is a silver lining these days--a car line called Corsica-Beretta. Chevrolet’s twin compact models, initially greeted with a cold shoulder by car buyers when they were introduced in the spring of 1987, are now Detroit’s hottest products.
Improved quality, a sleek design that represents a dramatic break with GM’s “cookie-cutter” image, and a $1,000 to $2,000 price advantage over comparable imports are all helping Corsica-Beretta take on the Japanese.
As a result, Corsica-Beretta sales, helped along by some timely incentives last spring, have soared nearly 85% this year, making it the top-selling car line in America so far in 1988.
“It was a long time in coming; Corsica-Beretta had a slow start,” observes Jack Kirnan, automotive analyst with the Kidder Peabody investment firm. “But right now, the Corsica-Beretta stacks up with the best of the imports on quality, and it has a huge price advantage over them.”
10% of GM Sales
“We’re absolutely pleased, and we expect it to be No. 1 in the industry for the entire year,” says Mike Erdman, general marketing manager for Chevrolet.
Indeed, the car line’s success has become a critical element in GM’s struggle to reverse the long slide in its share of the U.S. car market. Corsica and Beretta now account for more than 10% of all GM passenger car sales.
“If you had to pick (GM’s) most successful car line, I would certainly pick that line,” observes Chris Cedergren, a sales analyst with J. D. Power & Associates, an Agoura Hills automotive market research firm.
Chevrolet has had to pay a price for the car line’s success, however. With Chevrolet’s overall sales relatively flat this year, analysts believe that at least some of Corsica-Beretta’s sales are coming from customers who would have otherwise bought a different Chevy model.
For instance, the Beretta, the sporty, two-door coupe version of the line that Chevy says is targeted at young singles and couples with no children, seems to be stealing sales from the aging Camaro sports car, which has suffered a 23% sales decline this year. Meanwhile, Corsica, the four-door family-sedan version of the line, seems to be eating into the sales of Chevy’s Celebrity sedan, which has suffered a 20% drop.
“It (Corsica-Beretta) finally became a hit, but it has pirated sales from other Chevy car lines,” Cedergren notes.
Still, there is little question that Corsica-Beretta is now performing the way Chevrolet executives intended: Erdman predicts that the line will meet Chevy’s annual sales objective of 500,000 units this year.
But what pleases Chevy most is that the car line has filled an important void in the middle of the car market for GM’s bread-and-butter division. Corsica-Beretta is the first compact line Chevrolet has offered since the Citation was killed by negative publicity surrounding its safety record in 1984, and it puts Chevrolet back in the race for middle-income singles and families who have been moving to the imports.
The average Beretta buyer, for instance, is 32 and has a household income of between $38,000 and $41,000. About 28% of Corsica-Beretta buyers are trading in imports, Erdman says, the highest import trade-in rate for any U.S.-built Chevy car.
Wide Price Gap
Young buyers, apparently turned off by the rapid price hikes imposed by the Japanese over the last three years, are giving domestic cars such as Corsica-Beretta a closer look. “I really sense that there is a behavioral change out there, attitudes about domestics are improving,” analyst Kirnan observes.
The price gap between imports and domestics has become so wide, analysts say, that many consumers can no longer justify the added expense of buying Japanese. In the compact market for instance, the base price of a Corsica is $9,985, compared to $11,230 for a Honda Accord hatchback, and $11,299 for a four-door Mazda 626. When options are added, the gap widens.
With Corsica-Beretta, GM also seems to have sharply improved quality--a key to winning young urban buyers, analysts and dealers agree. “There are very few service complaints, and that’s a big plus,” says John Frezel, general sales manager of A. E. Nugent Chevrolet in Los Angeles.
But perhaps the most important lesson Corsica-Beretta has taught GM has been that the company can break out of its traditional approach to styling and still meet its primary goal of appealing to the mass market. Encouraged by Corsica-Beretta’s success, Chevrolet is planning to follow up next year with the Lumina, an intermediate-sized replacement for the Celebrity that will pick up some of Corsica-Beretta’s styling touches.
Further, GM’s decision not to follow its usual pattern by giving other car divisions look-alike versions of a Chevy sales success has given the Corsica-Beretta a uniqueness. Lumina will also be a Chevy-only product.
“The breakout in design has certainly helped us,” says Erdman. “But more than that, being the only division that has it has given our dealers a great opportunity.”
Times Researcher Leslie Eringaard contributed to this story.
A DRIVING FORCE Here’s how sales of the various models compare:
Model 1988* 1987 1986 1985 Camaro 74,715 117,324 163,204 199,985 Cavalier 230,415 30,695 357,093 431,031 Celebrity 192,950 306,480 408,946 363,619 Corsica-Beretta 307,427 214,074 12,879 NA
NA = Not applicable * Year to date
