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How Chevrolet Works

Chevrolet Strategy in the Late 2000s

Chevrolet’s future depends on how quickly and well the company tackles a number of serious problems that came to a head in 2005, when GM bled $8.6 billion in red ink, its worst loss since crisis 1992. Even before that, some financial gurus had said GM's situation was so bad that declaring bankruptcy might be the only way out.

While this isn't the place for a Harvard Business School-type analysis, GM had basically lost its competitiveness. Though still the world's largest vehicle maker, it was also still a bloated company building too many vehicles for too few buyers -- and buyers had been deserting for years.

In addition, huge "legacy" costs -- pensions and health-care obligations per UAW contracts -- left GM with a significant price disadvantage of $1500 per vehicle versus comparable Toyotas and other import-brand models.

One wag remarked that GM had evolved into a health-care provider that made vehicles as a sideline. Workers, for their part, were understandably reluc­tant to make concessions. After all, they'd made ­plenty since the early 1980s as GM closed plants, laid off workers, and reorganized itself time and again.

A final conundrum involved the high-cost incentives (rebates, low-interest loans, cut-rate lease deals) that buyers expected because the Big Three kept offering them. In the brutally competitive market of the early 2000s, Detroit found it tough to move the metal without "cash on the hood," and the economics were such that keeping factories running, even at a fraction of their capacity, was cheaper than closing them.

With all this and more, GM faced a crisis recalling the desperate Depression era, a once-unthinkable fight for survival. We hope that the company succeeded in turning itself around.

Meanwhile, the bow-tie brand moved to be a stronger player in the mainstream car market with four fresh entries starting with the 2004 model year. First up was a redesigned Malibu sharing a new Epsilon front-drive platform with near-luxury 9-3 models at GM-owned-Saab.

Somewhat daringly, bread-and-butter sedans were joined by extended-body Maxx hatchbacks on a six-longer wheelbase. The Maxx was actually hatched in Europe, which knew it as the Opel/Vauxhall Signum -- and didn't like it much.

At least Chevy was trying to woo more-active buyers over here, equipping the Maxx with a fore/aft sliding back seat for apportioning cargo space and rear legroom as needed. Reclining rear seatbacks were also standard, as was a fixed "skylight" above. Another exclusive was optional DVD entertainment for keeping the kids happy back there.

Both new 2004 Malibu body styles listed LS and nicer LT versions with a 200-hp 3.5-liter V-6 and four-speed auto­matic transmission. A price-leader sedan used the 145-bhp 2.2-liter Ecotec four-cylinder, but that was mainly for advertising. Laudably, Chevy standardized ABS, traction control, and head-protecting curtain side airbags for all but the base sedan, and rear disc brakes for Maxxes.

Options were fairly upscale for a family midsize, with power-adjustable pedals, a remote-control engine-starting system, and satellite radio among the choices. Front torso side airbags were added for '05 as standard on LTs, optional other­wise.

Styling, arguably a bit disjointed, became more coherent for '06, when leather-trimmed LTZ and sporty SS versions were added. The SS pair was notable for a new 240-bhp 3.9-liter pushrod V-6, plus a manual shiftgate for the automatic transmission, uprated suspension with 18-inch alloy wheels, a rear-spoiler, and a spiffed-up interior with leather/cloth upholstery.

A deliberately modest production ramp-up limited model-year '04 Malibu sales to 150,640, but '05 volume was back to previous levels at nearly 242,000. There was no mystery in that. The new-generation Malibu was keenly priced in the $18,000-$25,000 range, and it was a noticeably better car than its predecessor: stronger, tighter, more refined, and more pleasant to drive.

For more on Chevrolet cars, old and new, see:

  • Chevrolet New Car Reviews and Prices
  • Chevrolet Used Car Reviews and Prices