General Motors Rolls Out a Whole New Line of Crossovers

By Motley Fool Staff Markets Fool.com

A couple of weeks ago, General Motors(NYSE: GM)announced plans for four new crossover models at the North American International Auto Show.

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In this Industry Focus: Industrialsvideo segment, senior auto specialist John Rosevear goes through the four different models and what each of them does for GM, what the revamp will do for the line, and how the crossover cars fit into GM's model.

A full transcript follows the video.

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This podcast was recorded on Jan. 19, 2017.

Sean O'Reilly: What else can you tell us about some interesting floor models? I hear a lot about the increasing popularity of these GM crossovers.

John Rosevear: This is a big deal. I actually went to a press conference where Mary Barra talked about this at some length. This is a big deal for GM. They have these crossover models. I'm talking about the Chevy Equinox, the Chevy Traverse, the GMC Acadia and Terrain, vehicles like this that are bought as family holders, as alternatives to where 15 years ago a family might have bought an SUV --

O'Reilly: Just call it what it is: They're buying them to go to soccer tournaments.

Rosevear: -- a truck-based SUV, or a minivan, and now they're buying these things, which are kind of in-between. These are good sellers for GM, they're very profitable, but GM's lineup had been getting quite dated. A lot of them dated to 2008 or 2009, when these were first rolled out. They've been updated a bit since, but it was time for all-new ones -- maybe a little past time, although sales had been good. And GM is in the process of rolling out this whole new fleet of crossovers.

At the show we saw the all-new GMC Terrain -- the premium GMC five-passenger model -- and the all-new Chevy Traverse -- the big seven-passenger mass-market model that they position as an alternative to a minivan. This joins four other all-new crossovers that they've rolled out last year -- the GMC Acadia, which is their little one; the Chevy Equinox, which is the huge-selling five-passenger Chevy; the Buick Envision, which is a premium version, kind of a step up from the GMC Terrain; and then the Cadillac XT5, which is their luxury model. These are huge-selling profits. The all-new ones will almost certainly sell at higher prices than the outgoing models, because they're very nice. They have new options packages so that they can be loaded up to higher trim levels that will improve profitability. Something like a GMC Terrain Denali priced well into the $40,000s -- that's a very profitable vehicle for a five-passenger crossover.

They're not sexy products. They're not race cars. They're not future technology. But they are super-important to paying the bills. And this is a thing that GM is doing that they think will improve their profitability and their profit margins over the next couple years, even if the U.S. market continues to stall, and maybe even slow down. They are giving a very bright forecast for 2017. And a lot of it is based on "We have these brand-new crossovers." [laughs] It's a big deal.

John Rosevear owns shares of General Motors. Sean O'Reilly has no position in any stocks mentioned. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.