Can the New-Look Malibu
Help Jump-Start Chevy?

By JOSEPH B. WHITE
January 2, 2007

Say "Chevy Malibu," and some Americans think of a 1960s muscle car. Unfortunately for General Motors Corp., many more think, "rent-a-car."

Now, GM is unveiling a revamped look for the Malibu sedan, as part of a broad effort to convince people shopping for a car priced below $30,000 to pause on their march to Toyota Motor Corp. or Honda Motor Co. dealerships.

Today, GM officially takes the wraps off the complete design for the 2008 Chevrolet Malibu -- almost a year before the first production models are scheduled to hit showrooms. (Part of the car has been seen in teaser photos) GM is trying to generate as much early buzz as possible for the redesigned car, in part to build investor confidence in its turnaround strategy. Chevrolet, GM's highest-volume division, plans a significant launch in early 2008 that GM officials say will compare to the image overhaul executed several years ago for Cadillac.

The new Malibu "will be the beginning of a very big transformation for our car lineup," says Cheryl Catton, general director of marketing for Chevrolet cars.

GM hopes the 2008 Malibu will excite bored car buyers and leery investors.

GM's Vice Chairman for product development Robert Lutz says the new Malibu's more refined looks, improved ride and quieter interior are a milestone in the company's multiyear effort to upgrade the look and feel of its sedans and coupes. Now Chevy is going for a more international feel -- a European look with an inside that borrows from 1960s American style.

"It's a poster boy for what we are trying to do," says Mr. Lutz, who joined GM in 2001 with a mandate to lead a revitalization of its vehicle design.

The Malibu faces a difficult assignment that has overwhelmed a series of new GM cars over the past decade. GM retired the Malibu name in the 1980s and then brought it back in 1997 and slapped it on a midsize, front-wheel drive sedan nothing like the brawny rear-drive muscle cars that bore that name during the 1960s and 1970s.

Starting in the late 1990s, Chevrolet tried to position the car as an alternative to the conservatively styled Japanese sedans that dominate the midsize segment. GM engineers carefully tried to match the functions, features and specifications of the Toyota Camry and Honda Accord. As for styling, Mr. Lutz says, the thinking was "if the Camry is doing so well and it's bland, it means they like bland. Unfortunately, bland only works for the Camry."

Although Chevrolet has thousands more dealers than Toyota, Malibu's retail sales volume of about 100,000 to 125,000 cars a year is less than a third the Camry's total annual sales. As of December, the Malibu sold for an average of $17,939, after an average customer cash rebate of $2,438, according to transaction data collected from dealers by the Power Information Network. The Accord and Camry had no customer cash rebates, and were selling for an average $22,402 and $23,441 respectively. Ford Motor Co.'s Fusion midsize sedan was selling for an average $20,081 with a customer rebate of $1,069.

GM won't try to outsell the Camry with the new Malibu, in part because GM also positions its larger Impala sedan as a Camry fighter. But GM does want to close the pricing and profitability gap. Mr. Lutz says that's where better design comes in.

On the outside, the 2008 Malibu looks German, with an exterior profile and proportions similar to a Volkswagen Passat.

Mr. Lutz and GM vice president for design Ed Welburn point to what makes the 2008 Malibu different from the current car: Wheels that are pushed to the edges of the sheet metal, to avoid the look of a bulky car balanced on roller skates; a chrome molding around the side glass; European-style small turn signals, or "markers" on the fenders. The wheelbase -- the distance between the front and rear wheels -- is about 6 inches longer than the current sedan.

The new Malibu's interior is a more dramatic departure. The new dashboard has a "dual cockpit" look. "It's almost a direct lift from the '58-59 Corvette interiors," says Mr. Lutz.

John Mack, who led the Malibu's interior design team, says most versions of the Malibu will come with two-tone interiors, such as "cocoa and cashmere." Besides color, the Malibu will offer such features as a storage bin under the center arm rest big enough for a purse.

All these touches cost money, as do the materials and engineering that will make the Malibu quieter inside and new standard safety equipment such as side curtain airbags and stability control. GM engineers have tried to offset the added costs by using more parts from the prior model, sharing parts with other cars such as the Saturn Aura, and redesigning the body to reduce the use of expensive steels. Mr. Lutz says if by putting $200 into features that make the car look better GM can cut a $4,000 rebate to $1,800 "you are $2,000 ahead."

GM wants to sell fewer Malibus to one kind of customer: Rental car agencies. Those sales almost always return lower profits than sales to individuals. Instead of selling about 34% of Malibus to fleets, GM hopes to sell only about a quarter of the redesigned Malibus that way. Mr. Lutz says done right, rental sales could help GM. By selling better looking cars -- without "gray rat's fur upholstery and dark gray plastic parts" -- renting a GM car "becomes a national demonstration program where people actually pay to drive a GM car, and they say, 'Holy smokes, it's fabulous.' "

--Gina Chon contributed to this article.

Write to Joseph B. White at joseph.white@wsj.com

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