GM plans to drop 5 of 15 mid-sized cars

August 9, 2002

Traverse City, MI Joe Miller writing for Bloomberg reported that General Motors Corp. is cutting five of its 15 mid-sized car models in the U.S. by 2006 as the world's largest automaker tries to trim manufacturing and development costs and spend marketing dollars on fewer brands.

The company intends to stay ahead of growing competition from overseas-based automakers by offering fewer and more distinct models from Chevrolet, Pontiac, Buick and Saturn, said Gene Stefanyshyn, General Motors' executive in charge of mid-sized vehicles. The automaker leads the category with more than 32 percent of sales.

"We're going to decrease our (mid-sized car models) from 15 to 10 to better focus our marketing and resources," Stefanyshyn said today during a meeting with analysts. The Buick Century, for example, will be eliminated to provide more marketing dollars for the Buick Regal, he said.

Additionally, the automaker is sticking with its earnings forecast of 90 cents a share for the third quarter and $6 for the year excluding its Hughes Electronics subsidiary, Chief Financial Officer John Devine told the analysts. Including Hughes, he said the outlook is 80 cents for the quarter and $5.60 for the year.

General Motors shares rose 34 cents to $44.20 at 4:16 p.m. in New York Stock Exchange composite trading.

Mid-Sized Cars

The mid-sized car category is dominated by family sedans such as the Honda Motor Co.'s Accord and Toyota Motor Corp.'s Camry that range in price between $14,500 and $24,999 and can be between 180 to 199 inches in length, according to Ward's AutoInfoBank. General Motors built about 1.2 million mid-sized cars last year at six plants, representing sales of about $18.7 billion, or 18 percent, of the company's North American revenue.

General Motors also is eliminating three Oldsmobile mid-sized car models as its phases out its 104-year-old brand: the Alero coupe and sedan and the Intrigue sedan.

By contrast, DaimlerChrysler AG's Chrysler unit said Wednesday it would develop more car-based vehicles such as the upcoming Chrysler Pacifica, a cross between a minivan and a sport-utility vehicle. Chrysler in recent years has counted more heavily than rivals on trucks models such as Jeep.

General Motors had 23 mid-sized car models in 1997. Chevrolet alone had five mid-sized car brands -- Malibu, Prizm, Lumina, Impala and Monte Carlo -- on the market two years ago.

"Proliferation got the best of them," said Jim Sanfilippo, vice president of Automotive Marketing Consultants in Warren, Michigan. Sanfilippo said General Motors is now trying to copy Honda Motor Co. and Toyota Motor Corp. and their focus on fewer models. "General Motors is in the mode to learn," he said.

Ford Motor Co. and Chrysler have lost market share in the mid-sized car segment during the past six years and General Motors has maintained its share at about 32 percent.

Most of the growth in the category "has come from the resurgence of Volkswagen at the high end and the emergence of the Korean manufacturers at the low end," Stefanyshyn said.

Mid-sized cars are an "important profit contributor" to General Motors, CFO Devine said. "Obviously we have to improve our car share and our car profitability."