GM LORDSTOWN Chevy Cobalt will take a crack at premium small-car market

By DON SHILLING
VINDICATOR BUSINESS EDITOR
OR A SMALL CAR, THE Chevrolet Cobalt carries a big burden.
General Motors Corp. wants to start making money on American-made small cars, and it's invested $1 billion into its Lordstown complex to make that happen.
GM has said its most recent cars from Lordstown -- the Chevrolet Cavalier and Pontiac Sunfire -- were losing money.
To turn that around, GM says its next small car model will be a better car with a higher price. The base model Cobalt starts at $14,190, while the top-of-the-line SS Supercharged starts at $21,995.
To improve quality -- and reduce Lordstown's operating costs -- the plant has received a major remodeling over the past two years, including new presses to stamp metal parts, more robots to weld parts together, upgraded equipment to frame the car and improved assembly methods. A massive paint shop opens next year.
Confidence
The Cobalts that will be sold to the public start rolling off the assembly line this week, and GM and union officials are confident they have a winner.
"This car's going to sell," said Jim Graham, president of United Auto Workers Local 1112.
Plant officials say the upgrades will make the car better. For example, there will be smaller gaps between metal parts and a better frame for improved driving performance.
Better engineering also has created a Chevrolet model that can take on the likes of the Toyota Corolla, Honda Civic and Volkswagen Jetta, said Jeff Haag, Cobalt marketing manager.
GM calls the Cobalt a premium small car and is leaving the economy segment of small cars to its Chevrolet Aveo, which is made in Korea.
To play up its performance characteristics, the Cobalt is portrayed as a younger sibling of the Corvette in Chevrolet advertising.
"I think that when people drive this car, they will be thrilled," Haag said.
Improvements
He said buyers will notice the following:
UPower. The Cobalt's standard 140-horsepower engine is more powerful than the engines offered in the base models of the Corolla, Civic and Jetta.
U Handling. The Cobalt has speed-sensitive power steering that gives the steering wheel a tight feel on the highway but easy handling when parking, Haag said.
U Ride. An improved suspension and chassis help the driver "feel in touch with the road," Haag said.
U Quietness. To keep noise out of the cabin, the car has upgraded door seals and sound-deadening steel between the dashboard and engine. The panel consists of two layers of steel with plastic in between. Also, changes have been made to make the engine more quiet.
UInterior design. Chevrolet says premium materials are being used in the interior, and seats have been designed to keep the driver in place in tight turns.
Reviews
Industry analysts have been impressed.
John Naderi, editor in chief of Super Street magazine, said he was impressed with a test Cobalt model that he drove. The finish of the car was better than the Cavalier and he was impressed with the riding and handling.
Erich Merkle, an analyst with IRN in Grand Rapids, Mich., called it a "huge step forward from the Cavalier."
He said he has been particularly impressed with the attention given to the interior.
The exterior styling is straightforward with an aim of not offending anyone, but an eye-catching design isn't needed to succeed in small cars, as the Corolla and Civic have proved, he said.
"Do they have unique designs? No. What the Corolla and Civic have that Chevy doesn't have in the mind of the public is a reputation for quality," he said.
GM has improved the quality of its cars in recent years, but it takes time to build a reputation, he said.
Pricing
Because of the competition, GM will be pressured to add incentives to the Cobalt, which would reduce profits, Merkle said. He expects incentives to be added within four to nine months.
"With the Cavalier, people are used to shopping the deal. It will be difficult for the Cobalt because people will compare it to the Cavalier at least initially," he said.
Chevrolet has been offering Cavaliers with a "special value package" for less than $11,000 or other models with a $4,000 rebate.
Haag from Chevrolet said no decision has been made on incentives on Cobalt, but officials don't want large cash discounts on the Cobalt.
David Cole, director of the Center for Automotive Research in Ann Arbor, Mich., said GM hopes to make money off the Cobalt by marketing it as an "aspirational car."
If young buyers do aspire to buy one, the car can be profitable because GM has taken a lot of costs out of the way it builds cars, he said.
One way GM has done this is to standardize equipment and materials that are used in plants, he said. By buying such items from one source, GM can save large amounts of money when compared with allowing 10 departments negotiate for prices separately, he said.
For example, GM used to pay an average of $35 each for the red and green lights on the control panels of equipment in its plants. It has reduced that cost to $5 each.
GM also has reduced the cost of developing a car by using computer models more and increased the productivity of its plants, Cole said.
Wes Raynal, a writer for AutoWeek, said the Cobalt seems to be set up for success -- it's an improvement over the Cavalier and the price seems right.
But standing out in a crowded small car market will be difficult, he said.
"It depends on how the price is perceived by the public, whether they think it's too high," he said.
shilling@vindy.com