DETROIT GM challenges Japan with new midsize line

GM officials say this may be GM's last chance to succeed in the midsize car market.
KNIGHT RIDDER NEWSPAPERS
DETROIT -- After years of being trounced in the crucial midsize-car market by the Toyota Camry and Honda Accord, General Motors Corp. is launching an all-out assault with a line of cars that could revolutionize the automaker's lineup.
The company plans to spend billions of dollars rolling out millions of cars built using the same basic architecture but varying in style and function, and designed to help the automaker conquer a segment in which it has become virtually irrelevant.
One out of every six cars GM builds around the world, a total of 1.4 million vehicles a year, will fall under the program, dubbed Epsilon. Eight GM brands will feature cars built on the Epsilon architecture. The first of the vehicles to be built in the United States, the 2004 Chevrolet Malibu, will go on sale in September.
Epsilon is the biggest global development program in GM's history. The first two cars from it, the Opel Vectra and Saab 9-3 debuted earlier this year in Europe and are selling ahead of projections. GM added several shifts to meet higher than expected demand.
Seizing opportunity
"This is a once-in-a-decade opportunity," a GM executive close to the program said. "A lot of people thought we had conceded the midsize car market to the Japanese, and if we don't succeed this time, we may not get another chance."
That attitude is long overdue, said David Littmann, Comerica Bank's senior economist. "GM has to do something to challenge head-on the quality and perceived quality of the Camry. They must do this if they want to stay in the auto business."
Littmann said Epsilon becomes even more important as GM strives to reduce its dependence on truck sales. "They must offset greater competition in trucks by building better cars."
GM Vice Chairman Robert Lutz admitted that truck and SUV development had been GM's priority for years. "We made huge strides with our trucks," he said. "Now, we must make the car side of the ledger positive."
"GM has to do this," auto analyst Joseph S. Philippi said. "It's critical that they pick off some buyers from Honda and Toyota and stem the tide to brands like the Koreans, Mazda and Volkswagen. It won't be easy, but it looks like they've got a winner with the Malibu."
Reaching out
By GM's own figures, only 11 percent of people who buy an Accord, Camry or Nissan Altima even consider a GM vehicle. That's more than a million buyers a year who don't put GM on their shopping lists.
The Epsilon architecture will spawn at least 15 different body styles, and span prices from the $17,500 Malibu to around $40,000 for the Saab 9-3 convertible. In addition to the Malibu, the program will produce the next Pontiac Grand Am, Saturn L-series and a new midsize Buick. Epsilon products will fill three U.S. assembly plants that employ about 7,200 hourly workers.
GM defines vehicle architecture as a basic structure that can accommodate a wide variety of body styles, engines, wheelbases and widths.
The Malibu will go on sale in September 2003 as a 2004 model. GM will build it in Fairfax, Kan., beginning in March. Another Epsilon vehicle, the Pontiac Grand Am replacement, will follow a year later. GM's Orion Township, Mich., plant will make it. The replacement for the Saturn L-series and a new midsize Buick probably called the La Crosse will join the party in late 2005 when they roll out of the Wilmington, Del., plant.