GM expects new Chevy Malibu to break sales records for 2016

Article by Christian Andrei, on March 27, 2015

Sales are expected to skyrocket for the redesigned version of the Chevrolet Malibu, which is set to be unveiled at the upcoming New York auto show. For almost 2 decades, General Motors has been burdened with the Malibu’s poor sales attributed to its boring features. Now, GM is confident that it will be able to sell 250,000 new units each year in North America alone.

This projection is 25% higher than its sales last year. Sources claim that GM may even sell as many as 300,000 units annually. GM hasn’t given an official forecast yet; however, it told analysts last year that it had a target of 225,000 Malibus for 2016. The new Malibu will take in a profit of $1,500 higher than previous models.

These forecasts show that GM aims to gain a minimum of $450 million added profit for the new Malibu. This profit is equivalent to 41% of the latest quarterly net income of the carmaker. To entice buyers, GM will release ads that will boast of the Malibu’s styling, fuel economy, quality, and numerous features related to connectivity and safety.

GM CEO Mary Barra considers the Malibu a significant car as it has a key role in achieving profit margins of 10% in North America and a 20% return on capital worldwide. To achieve its goals, GM has to be able to catch up and get a leg up over its competitors such as the longtime frontrunners, Toyota’s Camry and Honda’s Accord.

The Japan-based automakers have the advantage of cheap yen. While GM officials claim that the present car returns a profit, it pales in comparison to the other cars. Kantar media data indicates that GM spent $801 on average to promote the Malibu during the last 5 years. Meanwhile, Honda used up just $539 for Accord promotions but it sold 60% higher of its sedans.

The Malibu has a 1% share of sales in Los Angeles – a fact that GM executives like to discuss. This means that it has a “tremendous opportunity” for growth, according to Steve Majoros, Chevy director of marketing, in a Reuters report. GM hasn’t exactly surpassed its targets for the Malibu.

According to LMC Automotive, sales in the U.S. of the Malibu will exceed 200,000 in 2016 but that it will go down that line in the next 4 years. On the other hand, IHS Automotive believes that its sales will range from 200,000 to 210,000. Analyst Maryann Keller believes that the Malibu wasn’t able to compete with its peers and it appeared to be a “generation behind.”

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