Chevrolet Spark, Malibu Face Distinct Challenges

DETROIT – Chevrolet is confronting very different challenges in the midsize sedan and A-car segments with the Malibu and Spark, but marketing representatives express confidence they have the right products to succeed in both cases.

The Spark, the first A-segment car ever offered by General Motors in the U.S., represents a unique challenge, says Cristi Landy, marketing director-Chevrolet Volt and Spark.

“We really don’t know in the U.S. what the acceptance of a vehicle this size is,” she tells WardsAuto during a recent media event here. “This is a new segment with eclectic competitors, and we’re learning everyday as we go now.”

Landy says competitors for the Spark include the Fiat 500 and Scion iQ. But she’s quick to point out the Spark, at $12,995, costs less than those models, which begin at $16,200 and $16,140, respectively.

On sale for less than three months, consumer response to the Spark has been great, Landy says, citing dealer clamor for more inventory.

Spark deliveries total 6,313 units through September, according to WardsAuto data. However, the car is being offered only in select urban markets, with a full nationwide rollout slated for first-quarter 2013.

In comparison, nationwide Fiat 500 and Scion iQ deliveries total 12,036 and 1,788, respectively.

“We’re getting younger buyers than those two (vehicles),” Landy says of the Spark’s competitors. “It’s too early to overanalyze, because the volume is so small. But we’re seeing a buyer that looks like a small-car buyer.”

Landy says 62% of Spark deliveries are conquest sales, with Los Angeles, New York and Chicago the model’s biggest markets. A good percentage of Spark buyers are 25 or younger, but dealers report seeing a wide age mix among customers.

“The average (Spark buyer) age is 48,” she says. “In general we’re seeing younger buyers, but to sell in volume you have to have older buyers, too.”

The Spark is unlikely to lose sales to the larger Chevrolet Sonic when customers visit showrooms, because the smaller model has dramatically different styling and appeals to a different buyer, Landy says.

Some auto makers offer A- and B-cars that look alike, which makes it easier for one model to cannibalize sales of the other, she says.

Landy declines to reveal volume expectations for the Spark, noting Chevrolet’s unfamiliarity with the A-car segment, where only a few auto makers in the U.S. have entries.

Cross-town rival Ford repeatedly has kept its European Ka A-car out of the market here due to low volume expectations. But that isn’t deterring Chevrolet.

“We chose to make the bet and (Ford) chose not to,” Landy says.

Jon Hahn, marketing manager-Malibu and Impala, faces a much different challenge than Landy and her team – launching the new midsize Malibu sedan in a large and ultra-competitive segment with many established players.

The midsize-sedan segment, the largest in the U.S., is full of new models this year, including a revamped Ford Fusion, Toyota Camry, Honda Accord and Nissan Altima.

Hahn is confident the Malibu can challenge the leaders based on its styling, refined ride and onboard technology, such as the MyLink infotainment system.

The segment “used to be Honda and Toyota by themselves,” he tells WardsAuto. “Now if you look at price points, volume, image attributes and consideration sets, the gap has really closed.”

Through September, Camry held the top spot in the segment with 314,788 deliveries, followed by the Accord and Altima with 247,847 and 234,040, respectively. The Fusion racked up 194,165 deliveries and the Malibu 179,465.

Chevrolet has caught some criticism for launching the top-end mild-hybrid Malibu Eco model in February, months before the higher-volume entry- and mid-level models arrived. Critics contend the launch sequence cost Malibu sales, as the price tag of the Eco model, which stickers at $25,995, drove buyers away.

Even though the full Malibu lineup is now on dealer lots, the sedan may have lost some of its market momentum against the onslaught of newer competitive models now hitting showrooms, critics contend.

But Hahn says that’s not a concern.

“By launching the Eco early, we were trying to seed awareness that we have a great new product with great fuel economy and technology,” he says.

Midsize sedan customers have changed, Hahn adds, and that those who traditionally have bought foreign-brand models now are more open to purchasing a domestic-brand vehicle.

But consumers will have to be willing to take a look at the Malibu for the new model to grab a bigger share of the segment.

“We have some formidable competitors, but we’re looking forward to just growing and attracting new customers,” Hahn says. “We’ll just keep digging and growing a bit at a time and see how the marketplace develops.”

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