[Outlander]

http://money.cnn.com/2014/04/17/news...html?hpt=hp_t2

GM's recalled Cobalt was a failure from the start

NEW YORK (CNNMoney)
The Chevrolet Cobalt, the car at the center of the General Motors recall crisis, was a losing bet from the start.

The automaker never really wanted to build the compact sedan, and it showed. Critics and car buyers alike reacted with little enthusiasm for the vehicle.

"They couldn't stop making them," said Kelley Blue Book analyst Karl Brauer, "but they stopped caring about doing a good job on them."

GM (GM, Fortune 500) now admits it should have fixed a faulty ignition switch in the Cobalt and similar models a decade ago when it was first discovered. At least 13 deaths have been tied to the problem, which can shut off the cars when they're on the road.

But the models involved in the recall were built to solve two company-wide problems, rather than to meet consumer demand.

First, regulations required automakers to hit certain fuel economy averages across all the cars they sold. For overseas automakers with competitive, fuel efficient cars, that was no problem. Not so for Detroit automakers like GM and Ford Motor (F, Fortune 500) that depended on sales of bigger, more profitable models like pickups and SUVs. For them, the compact cars were just something they had to sell, regardless of whether anyone wanted to buy them, much less if they could be sold profitably.

Another factor: A labor agreement with the United Auto Workers union that forced manufacturers to keep paying autoworkers whether they were on an assembly line or laid off. Such contracts made it expensive for carmakers to align production with demand. It made more sense financially to keep factories open and churning out the cheapest vehicles possible.

"The Cobalt wasn't designed to be the best compact car. It was done to make sure that GM met fuel economy standards and utilized manufacturing capacity that was already there," said Jesse Toprak, analyst with Cars.com.

So it's not that surprising that the Cobalt, and the versions of the car sold by GM's Pontiac and Saturn brands, weren't great cars. That's undoubtedly what GM CEO Mary Barra was referring to when she referenced the "cost culture" that governed what is now referred to as the old GM, prior to its 2009 bankruptcy, during Congressional hearings on the recall.

Consumers responded accordingly. So in order to sell the 200,000 or so Cobalts that General Motors was building every year, it offered large cash incentives to buyers, and it sold them in bulk to rental car companies which bought them at rock-bottom prices.

By 2010, the Colbalt's last full year on the market, fleet buyers accounted for more than 42% of its sales, according to figures from GM. GM declined to comment further for this article.

The rental car companies kept the cars for a short period of time, typically less than a year, then dumped them onto the used car markets, where they were bought by buyers looking for cheap transportation in a relatively new car. That drove down prices on the new cars even more, exacerbating GM's growing financial problems.

"When you put heavy incentives to sell to retail customers, and sell them to rental companies, you damage your prices," said independent auto analyst Michelle Krebs. "That's something Honda and Toyota didn't have to do."
Related: GM sales unscathed by recall crisis

The Cobalts that were bought by actual consumers were concentrated in the parts of the country where there was little competition from Toyota's (TM) Corolla or Honda's (HMC) Civic.

"It might have done OK in the Midwest, but it'd be tough to find a Cobalt purchased retail in Los Angeles," Toprak said.

The good news is that GM has since figured out how to produce a competitive, small car. The Chevy Cruze, the car that replaced the Cobalt, is selling well around the world and in the U.S.

"The Cobalt was part of an evolutionary process," Krebs said, "that helped them get to the Cruze," she said. To top of page

First Published: April 17, 2014: 10:43 AM ET

That's a strange article full of assumptions without a single quote from anyone at GM. I've driven the Cobalt and it wasn't all that different from its contemporaries.

So according to these guys GM didn't want a product in this class?

[rayhawk]

I think it is a bit of an exaggeration, but the fact is that, at that time, the trucks and suv's were the primary money makers for american automakers. They always received the most r&d dollars, and the most attention. If Honda and Toyota could have made more money by selling more profitable trucks and suv's (which they have tried, with limited success) they would have. The reality is that their home markets always required that they invest heavily in small cars, and at that time, in the US, small cars weren't very worthwhile if you had no problem selling trucks and suv's.

[monstertodd]

Well at least the Cobalt SS was pretty cool.

[Angrybird 12]

Before we got married my wife had a 2008 Cobalt LS Coupe. Sure it was a basic econo car but I didn't think it was any worse than a Corolla at the time. And damn we drove it on a trip and got close to 40mpg in it. I don't think it was as bad as this artical makes it sound.
I also had a 2007 HHR at that time, it was based off the Cobalt. I loved that little thing. After 4 years and 60,000 miles I only had to put brakes and two sway bar end links on it.

[LOWDOWN]

Happy Easter, Outlander. I hope the Bunny brings you some chocolate to sweeten you up...

[DGthe3]

If GM couldn't build efficient, globally competitive small cars, how is it that more than half their sales were comming from outside North America -allowing them to be the best selling automaker in the world for decades?

Oh well, never let facts get in the way of a good story ...

Besides, its not as if the Corolla or Civic are/were earth shatteringly awesome. They were marginally better than the Detroit offerings of the same era, in some ways, but most people more or less bought them out of reflex more than anything else: need small car ->buy Japanese. There are many reasons for that (a lot of which has to do with Chevettes & Cavaliers) but the Japanese cars, even back then, weren't as good as their reputation suggested & likewise, domestics weren't as bad.

[monstertodd]

The cobalt/corolla/civic, etc........all do the same thing. Basic transportation. This article is nothing but a slander campaign to get people spun up about GM and play on the emotions of the 2009 taxpayer bailout. Nothing but straight up propaganda.

[ssrs2lt]

wife built them and cavalier back in the day..they weren't as bad as the article makes out..I do believe the make cars no matter what cuz union had GM by the neck para phrasing article..

[banter]

I had a 2007 Cobalt LS from Sept '06 through Jan '14 when I traded it in on the Camaro and I never had a single problem with it. Had about 65k on it when I traded it in and averaged 35mpg in the city and 42 on the highway. It was very slow and had very little to be desired (read: stripped model), but that thing was a dependable and economical little bugger.

[Camaro_Corvette]

Originally Posted by monstertodd

Well at least the Cobalt SS was pretty cool.

Being only 2 seconds slower than an SS camaro around the ring. Yes, it certainly was cool!

[shaffe]

my sister had a Cobalt, and like others have said it was nothing special, just basic transportation. Had no issues with it, but it did feel relatively cheap compared to the Civic she traded in though.

[shine2013]

As someone who owned one briefly, that car definitely lowered my expectations on GM quality.