GM moves to shake midsize malaise

It's far too early to declare that General Motors Corp.'s new family of 1997 midsize cars will rebuild the near devastation left by the infamous $7 billion GM-10 program of the 1980's.

But GM's much-maligned Midsize Car Div. seems to have leaRNed some crucial lessons. Here are some hopefUl signs detected from initial inquiries about the new Pontiac Grand Prix, Buick Century, Oldsmobile intrigue and Chevrolet Malibu:

* Each has a different engine (a 3800 Series II V-6 for Grand Prix, although the base model comes with the same 3.1L found in the Century; a 3.4L, 24-valve V-6 for Intrigue and a standard 2.4L dual overhead-cam 4-cyl. powerplant for Malibu, although a V-6 will be optional).

* They don't look alike.

* The sedans will be launched first. There won't even be a coupe offered for Intrigue, Century or Malibu. Nearly a decade ago, all of the first GM-10 entries were coupes -- a strategy that badly backfired as the midsize segment led by Ford Motor Co.'s immensely popular Taurus moved overwhelmingly to 4-door sedans.

* Each is aimed at a distinct slice of the segment.

* There are no outlandish boasts about selling more than a million of these cars a year.

* Industry sources estimate that the total investment for the Grand Prix, Intrigue and Century was a frugal $2.2 billion, or less than a third of what was spent 10 years ago. Pointing to the black Intrigue, shimmering on its rotating stand during last month's North American International Auto Show in Detroit, GM Vice President and Oldsmobile General Manager John D. Rock underscores GM's new realism about how far it has to go to regain its dominance in the heart of the market.

"Ten years ago that car would have taken us to the moon and back," he says. "Today it's just a ticket to the circus."

Indeed, competition under the midsize big top is growing fiercer every model year. Toyota Motor Corp. will launch its new Camry this fall amid speculation that their folks in Kentucky have taken out so much cost the sticker price will stay roughly the same. Honda Motor Co. Ltd. will bring its next-generation Accord to market in the fall of 1997. Nissan Motor Co. Ltd. will introduce a new and slightly larger Altima about the same time.

"We're not naive enough to believe we will recapture the penetration levels we had in the '70s in the midsize market," says Robert W. Hendry, group executive for GM's North American Operations' business support group. "But we should make some inroads. Our research has told us to eliminate product overlap and stop competing with ourselves."

By now the dimensions of what went wrong in the GM-10 program are well documented. From 1985 to 1995 GM's share of new midsize car sales, as defined by Ward's Automotive Reports, tumbled from nearly 51% to 35.6%.

From mid-1987 through late 1988, GM launched nine recalls after the first Regal, Grand Prix and Cutlass Supreme models were introduced. The problems ranged from hoods popping open unexpectedly and wheels coming off to cruise control that would re-engage after the driver applied the brakes.

Four assembly plants were dedicated to four models that never sold more than what could have been built at two. By 1990, due to overcapacity and mind-boggling complexity -- there were more than 100,000 build combinations -- GM was losing close to $1,800 on every GM-10 car it sold, according to Paul Ingrassia and Joseph White in their book, Comeback: The Fall and Rise of the American Automobile Industry.

That has improved considerably in recent years. Two years ago, the Chevrolet Lumina was re-skinned and given a newer, stiffer suspension. Chevy also revived the Monte Carlo coupe. Shifting the Cutlass Supreme from the Doraville, GA, plant to Fairfax, KS, alongside the Grand Prix, has cut costs. Quality is also much improved.

"This year I would sell any of our current midsize cars to my mother or any other friend. But it wasn't until this year," says Mr. Rock, with his cowboy candor that often makes GM executives cringe.

The new lineup enables the General to harness that momentum and take it to the next level. Gone are W-body and A-body labels. Grand Prix, Century and Intrigue are part of the MS2000 program. The Buick Regal, which will be introduced in 1998, will come off this same platform as an upscale Century. So will re-engineered front-drive minivans that debut later this year.

Malibu is the first product of the P90 effort. Oldsmobile will get a version of it in late '97 or early '98.

The key will be to build them flawlessly from the start and with reasonable speed. To help avoid the launch-crippling glitches that plagued both the Lumina/Monte Carlo and Cavalier/Sunfire startups in 1994, GM completely revamped the Fairfax body shop more than a year ago.

Development time, which exceeded five years on the GM-10 cars, was knocked down to 48 months on Grand Prix, Intrigue and Century, says Ernest D. Schaefer, program manager for Century, Lumina and Monte Carlo.

The Century and Intrigue were the first models to go through the Vehicle Launch Center GM established more than three years ago to simplify designs and maximize the number of common parts shared by vehicles built off the same platform. Century has 20% fewer parts, for example, says Mr. Schaefer.

James Westby, GM's new vehicle line executive for midsize cars, says the current Grand Prix, Cutlass Supreme and Century have 75 parts in the front fascia. The new ones have 12.

Another cost-cutting design change: the entire side of the Century, from the front-door hinge pillar to the rear quarter panel, is one stamping.

Build combinations have been cut from the hundreds of thousands to less than 5,000. Such changes should pare labor hours per car from about 26 today to about 20 hours by the time the Fairfax (Grand Prix and Intrigue) and Oshawa, Ont. (Century, Lumina and Monte Carlo) are geared up to full production.

Perhaps the most daring move in GM's new midsize strategy is bundling the new Chevrolet Malibu, a slightly smaller car and the only one powered by a 4-cyl. engine (Chevy's dual overhead-cam 2.4L L4), in the lineup. Some of it has to do with Chevrolet's need to reposition Lumina so that it appeals to Caprice customers after the cavernous rear-drive sedan is gone.

The rest has to do with GM's more focused brand management.

Ronald L. Zarrella, head of GM's North American sales, service and marketing, wants to attack the core of the market by breaking it into four quadrants, with each of the four new models aimed exclusively at a distinct subset of buyers.

"We must better manage the image of each product, then give it consistent, planned advertising support throughout its life, not just when it is introduced," says Mr. Zarrella.

Grand Prix's target: enthusiasts seeking a sporty performance and expressive styling. To back it up, the design is much more aggressive than the current Grand Prix. It's "an in-your-face-kind of car," says GM Vice President and Pontiac General Manager John G. Middlebrook. Gone is the staid headlight bar that spans the front. Back is an updated treatment of Pontiac's traditional split grille.

While the base level SE is powered by a 3.IL V-6, the 3800 Series II V-6 is optional on the SE and GT, with a supercharged version capable of 240 hp on the GT. The coupe version of the '97 Grand Prix debuts this month at the Chicago Auto Show.

The new look also is aimed at younger buyers. The average current Grand, Prix sedan buyer is 50, and Mr. Middlebrook wants that down to 44 on the new one, which will be launched late this summer.

"Let's face it, the coupe has done great, but the current sedan is not as sporty as we need," he says. William Heugh, Grand Prix brand manager, says much effort went into tuning engine performance on the 3800, particularly to enhance acceleration between 30 and 60 mph (48 and 96 km/h).

Olds' intrigue, meanwhile, is the designated Camry and Accord fighter in this group. Its targeted customers are seen as more discriminating, less performance-hungry than Grand Prix buyers -- one reason why Olds selected the less powerful 3.4L V-6 instead of the 3800 Series II. But timing could be a problem. Intrigue production begins a year from now, or about five months after Toyota introduces its new Camry, and only a few months before Honda unveils an all-new Accord. Nissan plans a new and slightly larger Altima about the same time.

"Intrigue will probably be better positioned to lure the Saturn SL owner who wants to move up rather than taking away Accord or Camry buyers," says Wesley Brown, market analyst for AutoPacific Group Inc. in Southfield, MI.

Century's buyers are looking for "refined practicality," says GM Vice President and Buick General Manager Edward H. Mertz. That means being more traditional than Intrigue, but more upscale than Lumina and big enough for five or six passengers.

Malibu and Lumina are aimed at the "family value" crowd. These are people who keep their cars for six years or longer.

In contrast to the boxy Corsica it replaces, there will be no coupe counterpart to Malibu, like the Beretta. Chevrolet planners figure coupe buyers can choose between the subcompact Cavalier or midsize Monte Carlo, while Malibu takes. on such lower-level midsize sedans as Ford Contour, Mercury Mystique, Chrysler Cirrus, Dodge Stratus, Nissan Altima and Toyota Corolla.

The risk here is that GM has borrowed a page from Chrysler Corp. by taking all four cars public, with the exception of Grand Prix, at least a year before they go on sale. What appears to be a new GM on the design, engineering and marketing side must translate to the plant floor. Late changes in suppliers, a major cause of launch delays on Lumina and Cavalier, must be avoided.

"Without being able to drive the cars it is hard to judge," observes Autopacific's Mr. Brown. "But there is a clear separation in styling to go after four different types of buyers. That's a step in the right direction."