Will General Motors' New Midsize Sedan Follow in Ford's Footsteps?

By Markets Fool.com


General Motors' 2016 Malibu teaser. The Malibu makes its public appearance in April. Image source: General Motors.

Continue Reading Below

The rivalry between crosstown automakersFord Motor Companyand General Motors is an entertaining one, to say the least. For every aspect that Ford dominates, such as reinstating its dividend first or reducing its number of vehicle production platforms years ahead of GM, it falls behind in others, such as entering China, the world's largest automotive market, years behind GM.

In this particular instance, GM is releasing its all-new Chevrolet Malibu in the hopes that it will follow in the footsteps of rival Ford's very successful midsize sedan, the Fusion.


Chart by author. Data source: Ford and GM sales press releases.

What we know
Although GM has teased the 2016 Malibu, the official details are fairly scarce. However, it does appear that GM is completely overhauling the midsize sedan and starting from scratch.

"Malibu's gorgeous styling is the result of a masterful understanding of proportions," said Ed Welburn, General Motors' vice president of Global Design, in a press release. "The roofline has been stretched rearward giving a more sleek profile, while the front wheels have moved forward and front and rear overhangs have been reduced. Along with the sculpted body side, these cues help Malibu appear more dynamic and sophisticated."

Continue Reading Below

Along with a much-needed upgrade to its exterior appearance, the 2016 Malibu is expected to be about 300 pounds lighter than the current model, which is aimed to improve its fuel economy and handling.

General Motors is pulling a page out of Ford's playbook by releasing more information and details each week, rather than one large press release, leading up to its official debut at the New York International Auto Show this April.

Why it matters
The Chevrolet Malibu is important to investors for a couple of reasons. First, if the Malibu were to enter the largest new-car segment in the U.S. successfully, it would prove that the company's design and innovation have drastically improved in segments in which it was once trounced by import brands. That would be a huge win for investors, and would provide confidence in GM's ability to increase the competitiveness of its passenger cars -- and thus its sales and profits.

Second, the midsize sedan segment is the largest-volume selling segment in the U.S. automotive industry, and represents perhaps the best opportunity for GM to increase its overall market share at the direct expense of import brands, which have historically dominated this category.

Can GM pull it off?
There's no mistaking that GM has its hands full attempting to revive its sales in arguably the most competitive U.S. segment, and it will have to produce an excellent product to improve its sales at a strong clip. Consider the segment's well known and established competitors: Toyota's Camry, Honda's Accord, Nissan's Altima and Ford's Fusion. In fact, sales of the Malibu were down 7% in 2014, which was the only decline among the midsize segment's eight best-sellers -- ouch.

"We've got our act together here on the midsize-car segment," Mark Reuss, GM's product development chief, said at an investor presentation in October, according to Automotive News.

However, investors should also take note of GM's recent success with the Chevrolet Impala as a sign of hope.

InConsumer Reports' "10 Top Picks of 2015", the Chevrolet Impala scored a strong 91 out of 100 and took home the Large Car segment's top honors for Best Overall. To put that 91 score in perspective, it was the second highest of any segment's winning vehicle, other than the top overall score of 99 for Tesla's Model S. In fact, it was the second year in a row that Chevrolet's Impala has taken home top honors in Consumer Reports' list, and it was the first American large sedan to do so in 20 years.

Now, if only General Motors can clone the success and quality of its large-sedan Impala in its upcoming midsize Malibu. If it can do that, it will be a big win for investors, General Motors, and domestic car-buyers alike.

The article Will General Motors' New Midsize Sedan Follow in Ford's Footsteps? originally appeared on Fool.com.

Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford, General Motors, and Tesla Motors. The Motley Fool owns shares of Ford and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.