GM hopes new cars will boost its quality image

DETROIT, Aug 8 Reuters said that General Motors Corp. expects a slew of mid-size cars that will roll out over the next few years will change its quality image as it shoots for higher U.S. market share, company officials said on Thursday.

Mid-size cars from the world's largest automaker won five of the top six spots in a benchmark study on vehicle quality released earlier this year. But the best-selling Honda Accord and Toyota Camry are usually perceived as having the best quality in the industry.

"We are very aware that there currently is a gap between the actual quality of the cars we are producing, and the perceived quality that is in the minds of our customers," Chuck Russell, director of planning for premium, mid-size, luxury cars, told financial analysts at a seminar outside Detroit. "Our task is to close this gap. Let's remember the Accord was not always what it is perceived to be today."

Among all models, GM moved into third spot, the highest ranking ever for an American automaker, behind Toyota Motor Corp. (Tokyo:7203.T - News) and Honda Motor Co. Ltd. (Tokyo:7267.T - News) in the latest J.D. Power And Associates Initial Quality Survey, which asked buyers about their initial impressions during the first 90 days of ownership.

GM's strong lineup of trucks, and costly incentives, have helped it reverse years of declining market share. GM's U.S. market share, including its Saab unit, has inched up to 28.7 percent so far this year, up from 28.3 last year. GM executives have begun wearing lapel pins with the number 29, the target for the end of this year.

PONTIAC CONVERTIBLE

Now the automaker, alone among Detroit's Big Three in increasing its market share last year, is focusing on cars. Mid-size cars, still the largest segment of the U.S. automotive industry, accounted for $18.7 billion in revenues in North America for GM last year, Russell said.

Beginning in the second quarter next year with the launch of the redesigned Pontiac Grand Prix, GM will introduce more than half a dozen mid-size cars over the following three years, including a few new variants, GM officials said.

Among the new models will be the 2004 Chevrolet Malibu Max, said Gene Stefanyshyn, vehicle line executive for mid-size cars in North America. The Malibu Max, which officials said could have a different name when it is introduced, will be half an inch shorter than the Chevrolet Malibu, but with a 5.5-inch longer wheelbase and "business-class comfort" rear seats.

GM will also offer a Pontiac performance coupe and hardtop convertible with a six-speed manual transmission. The coupe may also have all-wheel drive, Stefanyshyn said. A larger Saturn sedan, with a rear liftgate, will also come to market, he said.

ESCALADE ESV

Even with the new models, GM will cut the number of nameplates and body styles it offers for the mid-size car segment to 10 from 15. Among those to be chopped will be the Oldsmobile Alero and Oldsmobile Intrigue, due to the demise of the Oldsmobile brand, and the Buick Century.

"Our competitors understand the importance of this segment to their futures, and they're not going to give up ground to us willingly," Russell said. "This is going to be a dog fight."

The head of DaimlerChrysler AG's Chrysler arm told an automotive seminar in northern Michigan on Wednesday that 14 of its 21 new or refreshed models due out in the next few years will be cars, a switch from the automaker's recent history of depending on pickups, minivans and sport utilities for roughly 70 percent of its sales.

GM also discussed with financial analysts its strategy for growing its Cadillac luxury vehicle brand, including the launch next spring of the Escalade ESV, a Chevrolet Suburban-size sport utility vehicle 22 inches (56 cm) longer than the Cadillac Escalade.

GM developed the Escalade ESV for under $10 million, said Jim Taylor, vehicle line executive for prestige cars. "If you take the kind of contribution margin that these kind of vehicles produce, the payback for this vehicle is less than 2 weeks. That's a no-brainer," he said.