How Much Does a Gm Make at a Car Dealership

Small cars were big news at the Detroit show this year. With impending CAFE regulations and the fear that improvements in the global economy will raise the price of oil, automakers are trying hard to persuade us that smaller is better.

Both GM and Ford showed important new small cars. The Chevy Aveo RS concept gives us a good idea what the next Aveo will look like—more stylish, more capable, and larger than the current penalty-box-on-wheels. The Chevy Cruze has been seen before—and while it's boring to look at, it's a lot of car for the outlay. The less said about the hideously ugly Chevy Spark, the better, although it will likely be cheap ("a value proposition" in automaker-speak).

The new Ford Focus, on the other hand, is a knockout, at least from an interior and exterior styling point of view. If it drives as well as the current European Focus, it will certainly challenge VW, Mazda, and Honda, who make the best small cars on sale here. But it also looks like an expensive small car, and probably will be.

Ford CEO Alan Mulally—who was rather more combative in person during a roundtable discussion at the auto show than I had been led to believe—defended the move upmarket thusly: "We have made some pretty marginal cars in the past, but the quality of the new cars will help net prices move up. We have to deliver on the product promise and show the extra value in these cars. We need to get to the stage where we have the same value that Toyota and Honda have." He added: "If you don't have great products, you can't get great prices."

There is, however, a problem with Ford having to charge more for the new Focus than it gets for the current car. Will consumers, who are used to getting their Focuses for considerably less than the sticker, be prepared to pay actual transaction prices in the high teens?

Of course, you could argue that a potential Focus buyer who can't afford the new one can now trade down to a Fiesta, but they don't come much more cheaply than a current Focus. A base Fiesta S sedan—roll-down windows, anyone?—is $14,000. That's likely more than many current Focus buyers are actually paying. A basic Fiesta SE hatch is right on top of the current Focus base price and I managed to spec an SES out to $22,000. Yes, that's right: $22 large for a tiny car.

It strikes me that Ford is doing the right thing by bringing us better small cars in the shape of the Fiesta and Focus. It's also a smart long-term option to bet that gas prices will go up and people will trade down into smaller vehicles. On the other hand, they need consumers to trade down, because it will be hard to meet those CAFE requirements otherwise.

But the big worry for Ford has to be how GM will price the new Aveo and the Cruze. In Europe, the Chevy Cruze doesn't compete directly with the Focus (the Opel Astra does that) and is a cheaper offering. It's the same story with Aveo, because the Opel Corsa lines up against Fiesta. The Cruze doesn't look as good as the new Focus and likely won't drive as well, but it is a vast improvement over the Cobalt (and over the current U.S. Focus). GM can likely undercut the Focus and make more money per car while doing it, which has to be a worry for the top brass in Dearborn.

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How Much Does a Gm Make at a Car Dealership

Source: https://www.caranddriver.com/news/a18737625/its-ford-vs-gm-again-only-with-smaller-cars/

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