Can the Chevy Cruze Continue its Winning Streak?

Last year, General Motors Company scored big with the launch of the Chevrolet Cruze. In fact, many dealers were so confident about the model, they provided their customers with competitor’s vehicles including the Toyota Corolla, Honda Civic and Ford Focus, so they could make head to head comparisons. In most cases, the gamble paid off as the Cruze quickly became the best-selling compact vehicle in the country.

Even critics who had grown accustomed to panning GM’s compact offerings had nothing but praise for the Cruze. Consumer Reports heralded the Cruze as “greatly improved” compared to previous models like the Cobalt.

Production delays caused by the March 11 Japan earthquake also helped boost sales of the Cruze. In the months immediately following the quake, Honda and Toyota were forced to cut production by about 50 percent, which led to higher prices and less selection for U.S. consumers.

According to data compiled by R.L. Polk & Company, the Cruze’s conquest rate from Toyota increased 7.5 percent during the first two months of the year. From March through June, that rate rose to 9.2 percent. The conquest rate from Honda also jumped from roughly 5.8 percent to 7 percent.

But now, with Toyota, Honda rapidly replenishing their U.S. inventories, some have begun questioning whether or not the Cruze can maintain its dominance of the compact sector.

IHS Automotive analyst Aaron Bragman says, “It’s going to be a fight,” but concedes, “GM comes better armed than it has maybe ever in its history.”

Another factor in the Cruze’s favor has been the lack of new and refreshed compact models from Honda, Toyota and Ford. However, the new Ford Focus nearly outsold the Cruze this past May. Although the Cruze has regained its sales lead in recent months, Ford Motor Company’s top sales analyst George Pipas thinks that could change as Focus inventories improve. During the first 18 days of August, Focus inventories were fell to 18 days. As of September 1, Ford had a 33-day supply of Focuses.

Still, the Cruze has a number of advantages over the competition, including price and size. The average transaction price for the Cruze this past August was $20,465 compared with the $21,730 average transaction price of the Ford Focus.

Former GM product chief Bob Lutz also points to the Cruze’s size as a competitive advantage. In a recent interview, Lutz said, “The Cruze was designed inside and out to look like it’s a half-class higher than it actually is, and people see it that way.”

GM spokeswoman Annalisa Bluhm expects the Cruze to remain a top-seller, but admitted, “We still expect to be fighting it out for segment leadership each month.”

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