In the Chevy Malibu, GM's Pride and Its Challenge

Firm Hopes Emphasis on Quality Will Spur a Turnaround; Consumers Remain Wary

When General Motors executives are asked whether the company can really be revived after bankruptcy, they'll quickly point to the Chevrolet Malibu, and it's easy to see why.

The revamped mid-size sedan was named 2008 "North American car of the year" by auto journalists. In Consumer Reports' rankings of reliability, satisfaction and cost, it beat or tied its main Japanese rivals, the Toyota Camry and the Honda Accord. And in quality surveys by J.D. Power and Associates, it bested those competitors.

"The single most important thing we can do is get the product right," said GM chief executive Fritz Henderson, citing the Malibu, in a recent interview at his office.

But despite the critical acclaim, the revamped Malibu has made only small gains in the marketplace, and the experience highlights what may be the most daunting question facing the company as it emerges from the bankruptcy sale approved Sunday: Even if the company can produce hits, will generations of disenchanted customers come back to GM?

The old Malibu garnered 9.7 percent of the mid-size car market in 2005 and dipped to 7.8 percent in 2006 before the relaunch; through June 2009, the market share for the new Malibu stands at only 9.8 percent, according to company figures.

For anyone gauging the potential of the company and the fate of the federal government's $50 billion investment in it, those numbers are disquieting.

"We knew customers would be suspicious," said Troy Clarke, president of General Motors North America, adding that the brand's rehabilitation will take time. "It's a journey. When the history of GM is written, Malibu will be seen as the first step."

Company officials say they think that other new GM cars, such as the Chevrolet Traverse, a crossover sport-utility vehicle, and the Cadillac CTS, will further bolster the company's standing with consumers. But they acknowledge that in some quarters resistance to GM is deep and long-standing.

Clarke witnessed these attitudes during focus groups for the Malibu. At one, held in the San Francisco Bay area, a place where General Motors is widely distrusted, a meeting facilitator passed around 8-by-10 glossy photographs of the new Malibu to a dozen people. The Chevrolet icon was obscured in the pictures so the participants didn't know the brand.

Standing behind mirrored glass, Clarke watched as the facilitator listed the raves the car had won from critics. The participants grew increasingly enthusiastic, and they still didn't know it was a GM product.

"The facilitator said, 'What do you think of this car?' and they said, 'Whoa, that's really nice.' He said, 'What if I told you this was North American car of the year?' And the group would nod and say 'I can understand why.' He said 'What if I told you it got the best fuel economy in its segment and it was recommend by Consumer Reports?' And I mean people were reaching for their checkbooks.

"Then we say this is the new Chevrolet Malibu, and then boom."