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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