GM Takes Leap of Faith on Large SUVs

Wall Street Journal

Despite the current move to smaller, more fuel efficient vehicles, General Motors says its refreshed Chevrolet Tahoe, Suburban and GMC Yukon will be available in showrooms early next year.

Learn more about the strategy behind this gutsy product expansion move.

General Motors introduced the latest generation of its largest sport-utility vehicles on Thursday, betting it can still make some serious money from these hulking vehicles.

The refreshed Chevrolet Tahoe and Suburban and GMC Yukon will begin arriving in showrooms early next year offering consumers improved fuel efficiency, more antitheft features and automatic fold-flat seats. It is the first face lift for the vehicles in almost seven years. Although price wasn’t disclosed, the vehicles will likely sell for between $45,000 and $50,000 based on existing models.

GM is refreshing its big SUV lineup in a U.S. market that is sharply different than in 2007, when these vehicles were last redesigned.

“We are back to the core buyers,” said Chevrolet Trucks Marketing and Strategy Director Maria Rohrer. “These are people who have two or three children, and they need something either to cart around their family, their kids and their friend’s kids, soccer equipment, or they need to tow Jet Skis or a boat. These are people who want a little more style than what a minivan has to offer.”

Mr. Ammann defended the decision to invest in a new line of big SUVs when most rivals are abandoning the market amid tougher fuel-economy requirements. GM said its models comprise 75% of large-SUV sales.

“We are meeting customer demand,” he said. “We obviously have a huge position in the market, and we’re delivering what they want.”

Alec Gutierrez, a senior analyst at automotive researcher Kelley Blue Book, said, “Behind pickup trucks, these large SUVs generate one of the biggest profit per vehicles sold, ranging between $3,000 and $4,000. They are affordable to produce, they are a high profit center. So it makes sense [to introduce new models].”

The updated vehicles come as auto makers are once again experimenting with SUVs as they try to take the distinctively American idea to other markets around the world. They are making SUVs smaller, more aerodynamic and sleek.

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