Issue: Jan 2003

Making Chevy Great Again

With a firm grasp on its heritage and a detailed plan for its future, Chevrolet is poised to return to prominence.

by Ken Gross

Thirty-one--year GM veteran and Chevrolet General Manager Kurt Ritter must have a Chevrolet bowtie tattooed on his chest. Dogged, determined and fiercely loyal, he's seen it all. When he began his career, Chevy was boss, with well over a million cars sold annually. Over the years, in what must be an anathema to a Chevy diehard, Ford accelerated, then passed Chevrolet as the market leader. Along with the rising Asians, GM's own Saturn division cannibalized Chevy's bread and butter franchise.

Chevrolets SS concept telegraphs the direction the division is taking to regain its tradition of performance and personality.
Ritter may have been discouraged, but he's never stopped plugging away, anchoring the basics and rearranging the building blocks. He's clear on where his division needs to go. And he's determined to pass Ford and hold off Toyota in the process. For the first time in many years, Chevy and Ritter have a shot.

When you do the math, Chevy sales still lag behind Ford's, but the gap is shrinking. Ford has helped by imploding. Hard hit by its inept initial response in the Firestone debacle, it compounded its problems by struggling with repeated recalls on Focus. For an encore, it failed to score with what should have been an easy layup with the Thunderbird, and is seemingly unable to move forward from a styling perspective without looking in a rear view mirror. Ford Motor Company is undergoing a leadership shuffle, you could say a power struggle, with its 'British mafia' pitted against young Billy. And with all those self-inflicted, new product-robbing budget cuts, things may get even worse before they get better.

Meanwhile, GM, virtually exploding under Bob Lutz and Gary Cowger, is remarkably re-energized. This well-synchronized pair are joined so closely at the hip it's hard to know who's boss -- and it doesn't matter. Together they're approving new cars and trucks that make sense and will be competitive, not just good enough.

Ritter's game plan isn't rocket science and doesn't have to be. Chevy spans one of Automotive Industries January 2003 29 the widest ranges in the business. The 92- year old American icon brand still makes abundant sense for everything from the lowly Cavalier to the sophisticated Corvette. Chevys Baseball, hot dogs, apple pie and Chevrolet values are still well understood and made an indelible impression. But there are holes in the product line and Ritter simply has to fix weak sisters and plug those gaps.

Bouncing Back

Bringing back vehicles like the Camaro (1967 shown) are a priority for General Manager Kurt Ritter.
Chevrolet is back, Ritter declares, pointing to recent successes with Chevys trucks. Silverado sales have been helped by the diesel, Avalanche is a great conquest vehicle. Trailblazer has gained more market share than any of the trucks out there. We have gained share in every state except South Carolina where we went backwards by 49 units (in the first 9 months of this year). Relative to Ford, he crows, weve reversed our fortunes. In fact, we started gaining on them two to three years ago.

Ritter is quick to point out Fords sales lead in cars, especially with Taurus, is based on less profitable fleet sales. On cars we actually lead them. On strength of Impala, we have a high volume retail-selling mid-sized car. They do not. Volume, in this case, is relative. Chevrolet sells just over 200,000 Impalas today and it takes no prodding for Ritter to cut to the real problem: On the car side, quite honestly, he admits, the competition is not Ford. Its Toyota and Honda.

These rivals sold over 800,000 Camrys and Accords, between them, last year. Chevrolet must reclaim some of that business. There is also the issue of competing with sister division Saturn, especially with the stylish new ION on GMs Delta platform. In a big company, Ritter offers, diplomatically, you hope that you dont interact, but in reality, customers have choices and you dont always know where theyre going. He believes, we interact very little with Saturn on most of their products. Nevertheless, its food for thought to wonder what might have happened had GM invested in Chevrolet, rather than expending billions to create the new Saturn division. Sadly, much of Saturns new culture was soon smothered by the unions and most of the rest stayed in Tennessee. But thats water under the bridge.

Chevy now has its own small car opportunity with the Cavalier replacement, which, according to Ritter, theyll do right this time. Its not just a rebadged Opel, he insists. I would call this an Americanization of the (Opel) product, as opposed to just a Federalization of it. Were not just meeting safety and emissions (regulations). We have invested quite a bit in styling to make it look more like a Chevy the fact is, that theres hardly a panel that will be shared. Thats a different approach than the Focus took. Moving up one segment, the oppressively bland Malibu, its repetitive brake problems aside, has been a base hit, not a home run. Admits Ritter, The new (2004) Malibu is an important car. I think for the first time we have a vehicle that will compete. For its segment, it has great ride and handling plus expressive styling. We will have a great deal of content and value in it. In the last two clinics, he reports enthusiastically, 50 percent of the respondents thought it was a luxury European import. Thanks to GMs global Epsilon platform (see cover story p. 22, Silver Bullet), Ritter believes Malibu will make quantum leaps in ride and handling, comfort and convenience. He predicts the cars will go head to head with Camry and Accord and provide both quality and personality.

His term personality is key. Its something Chevy had in abundance years ago, but seems to have lost. Its Asian rivals, (with the exception of the hot new Mazda6 and Nissans Altima and Maxima) churn out wonderful appliances, but theyre relatively devoid of personality. Ritter believes Chevrolets comeback will ride on the strength of reinventing some of the dash and verve that was a division trademark back when they sold snappy Bel Air hardtops and convertibles, Nomad sports wagons and big, reardrive Impalas. But hes also got to overcome some deep-seated market opinions.
Changing Minds About Chevrolet

Ritter and GM NAO President Gary Cowger introduce some of Chevrolets renaissance products. From left is the Equinox, Cheyenne and Malibu.
Is the consumer perception of GM quality changing? Ritter thinks it is but adds that the divisions deeds, not words will carry the day. Still, he is realistic in his expectations.

Were probably not going to get the guy or gal thats on their ninth Camry, he admits. But with the next generation Malibu, we will get a shot, we believe, with a person whos considering a Camry and an Accord, or who may have been a former Chevrolet owner.

Three million Chevrolet vehicles annually is Ritters goal, but can they do it? That number is still a big number, and it is a vision, he admits. But we have vehicles coming (in segments) where we dont do very well. Were selling roughly 40,000 Trackers at retail and were going to have a new (Saturn Vue-based crossover) Equinox SUVwhich could make that number over 100,000. Theres a big plus there. Were going to do better in small cars in the future thats going to help us. Still, he concludes, we must do better in cars while maintaining strength on trucks. Being number one is a goal for Chevrolet, but Ritter qualifies the statement by adding that it wants to be the largest retailer as opposed to leader in total (sales). He explains that its hard to hold dealers responsible for Ford fleet sales to Hertz, noting that in the last numbers he saw, less than half of Taurus volume was retail. And while that may keep factories running, its not profitable.

Chevrolets image problems do not extend to its truck line, which continues to show year-over-year growth. The Silverado is its bread-and-butter vehicle.

Cavaliers introduction was delayed until it was right. The car is critical to lure young buyers.

Weve done some things in our business plan to make sure that we concentrate on retail, Ritter says. After the Impala launch, we kept Lumina for quite some time as an entry into the rental fleet. We did that (again) with Trailblazer, where we had Blazers going into the rental market, keeping residuals on new retail pieces as high as possible. Well do the same strategy with the Malibu (where) we have the opportunity to double our retail sales. Despite its broad product range, Chevy is sorely lacking a small-to-medium sized wagon, especially one that offers all-wheel drive, like a Subaru. And while the Impala has done a creditable job, its simply not as large as an old Caprice. Sadly, big family sedans used to be Chevys domain, along with a decent and highly visible (if not so profitable) business selling taxis and police cruisers.

Says Ritter: We could sell a car thats larger than an Impala but we think Impala can cover most of that market. Mercury Marquis is more a Buick effort, he says, omitting mention of rival Fords Crown Victoria, the sole mainstay in the cop car and hire fleet game. But wagons he hesitates, I wouldnt discount that as an opportunity we are exploring very seriously.

For Chevrolet, theres got to be opportunity here. Chryslers Pacifica looks to be an out-of-the-box hit before they sell one unit and Dodge has a future hemi-powered sport wagon showcar this year. Wheres Chevy? Perhaps the extended wheelbase, 5-door 2004 Malibu Maxx is the answer.

Plugging the Holes
Ritter is surprisingly candid about Chevys lost sports coupe business. Clearly, the one area where we have to find an answer, he says, is the Camaro. Every day (literally, every month) we wake up, Fords selling 10 to 12,000 Mustangs. We wake up in the hole because its something we dont have. I would consider that our number one area that we need to find a solution to.

But Chevy better hurry, Mustang celebrates its 40th birthday in 2004, and spyshots of a retro-styled racy-looking 2005 Mustang convertible appeared as this was written. Surely, Chevrolet needs a Camaro as much as Pontiac needs a GTO? And why wouldnt the Holden platform work for both brands?

The SSR is production bound. Ritter says it's a car customers naturally fall in love with.
Chevrolets going to make a big deal about its SSR, a retro-looking convertible sports pickup estimated to sell for around $35,000. But at just 10,000 projected annual units, its little more than another halo car. Ritter acknowledges that Chevrolet already has the greatest halo vehicle thats ever been created the Corvette. He also realizes that Corvette needs to move closer to Chevy, and Chevy needs to move closer to Corvette. He says there are gotta have cars and fall in love with cars. Both are good but the fall in love with cars are a degree higher. He puts the SSR in that category. Still, while SSR will surely increase showroom traffic, its equally intriguing to ponder bringing back a more affordable El Camino-type passenger pickup. Would an El Camino account for a halo and even more sales volume?

Ritter knows he needs a bridge from those halo vehicles to mainstream high volume offerings. And that bridge is the SS strategy, which will provide uplevel performance in several of Chevys mainstream offerings. And the division is well aware that it must create the notion of attainable aspiration. Thats what Chevy has been all about when it has been successful. It wasnt just all that people could afford, it was what they wanted to afford.

Ritter thinks that SS models, like a 240 hp sporty Impala, could sell in the range of 10 to 15 percent of a given cars volume. He notes that to do that there has to be a delicate balance between being exotic enough to be aspirational but at the same time affordable enough that basically everyone can afford them. SS will represent a legitimate increase in performance. It will have a style enhancement of its own that will provide that bridge back from the halos to the mainstream vehicles. Thats something Chevrolet hasnt had for a long, long time. But the strategy had better work. There wont be a new Monte Carlo (and its still a maybe) or completely new Impala until 2007!

A business case for the Bel Air (concept vehicle shown) is still being hammered out. Ritter wants it in the Chevy lineup.
We suggest putting the Bel Air convertible on that bridge. Right now, theyre still developing a business case for it. But its one of those cars that clearly say build me!

Ritter agrees. Yes, I put Bel Air in that area of open air, fun, with a design thats relatively uncluttered and will wear for a long time. I call them blue blazer designs, he says. By that I mean you can wear em anywhere and you can wear em for a long time. Thats what they do. Fun is an indispensable part of a brands livelihood, I think. (When) we went to brand positioning, I think we got far too serious, with security-oriented positioning for our brands. People dont want to be scared, they want to have fun.

Looking back, Chevy has an amazing heritage. Its not as though they have to reinvent themselves every day, the trick is having the right products. The SS strategy is not a new idea. Ritter admits. Its reinventing and contemporizing the past that works so well for us. And bringing that into play on (both) the car and the truck side. There's no reason not to do it on the truck side."

Warming to the subject he continues, "The mid-utes of today are like the 4-door sedans of the 1960s. It's a mature segment that needs some spice." German import brands with M-Sport or AMG badging are the obvious examples. That strategy allows you to sell a decent car, then offer a sportier version without overly compromising the mainline version. "I'll take a few dings in brand college," Ritter says, "to do an SS on a Trailblazer." Chevrolet management knows that getting a critical mass of products that continue to flow is absolutely necessary to achieve its strategy. And Ritter credits Lutz and Cowger for buying into that vision and understanding the need to hold onto trucks and grow with cars. Ford notwithstanding, Ritter emphatically states that the greatest long-term threat is Toyota. Bottom line, Chevrolet can recapture the leadership slot, but its cars (and trucks) can't be simply good enough. "That's right," Ritter says. "I can tell the world about our increased quality and it's valid and correct, but if you just bring that to the marketplace, that is not going to win them back. What you need to do, is to provide the two "Ps" they don't have ? performance and personality. And I think the SS strategy can help us there." Everyone remembers vintage Chevys that people still look at and say, 'wow!' Chevy has to be offering future Woodward cruise material ? right now. Performance and personality were always part of the brand, especially after 1955 when the smallblock V-8 came out of nowhere and became the darling of hot rodders and racers. If your roots are good and you can go back and contemporize them, you're on the right path.

One of the immense challenges Toyota and Honda have is that their cars have become somewhat bland, and lacking in personality. They're great functional vehicles and they're bulletproof images for quality, but the brands themselves aren't an overly exciting proposition. It's definitely where Chevrolet can go if Nissan and Mazda don't get there first.

Chevrolet has 2,200 single-focused dealers and many more multiple points. Ritter calls this "a high differentiator. We have an uncluttered retail environment to sell through, and that's a big enabler. You have to have a vision. It's a struggle, but people work harder when they do, Today's reality is what yesterday's vision was. We have laid out our vision, we've made progress. There will be bumps in the road. But I honestly believe we'll get there."

Our advice? GM can't ever sell Chevy short with product again and each new entry has to be world class, not Velveeta cheese like old Luminas and the current Malibu. With its comprehensive truck lineup, and plenty of updates and replacements in the works like the Colorado and Equinox, Chevy's proven that it can regain lost share and momentum. As possible fuel crises loom again, as consumers tire of SUVs and crossovers, as new variants like Chrysler's Pacifica and PT Cruiser gain prominence, and as Americans turn back to station wagons and comfortable sedans, Chevy's rebirth hinges not only on being there, but being there with the right stuff.

Chevy: Cool with the Kids

Chevrolet General Manager Kurt Ritter is pleased with a GM research study where kids 18 to 22, were asked, 'How acceptable is this brand to you?' "On truck side," he says, " Chevrolet was #1. On the car side, we were #3, behind Toyota and Honda, but ahead of Ford and Dodge. We have an opportunity to take our truck equity and bridge it over to the car side with new offerings and become relevant on both sides. There isn't anything in Chevrolet's brand that young people can't relate to," Ritter believes, "and that's good." He cites Rolling Stone magazine and a feature of up and coming artists shown with current, past and future Chevys. "You know, when Midwestern companies try to be cool," he confides, "they come off a little bit like dork, and that isn't the case here. This is real stuff.

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