Chevrolet Is Betting Its Next Five Years on One Car. Will It Pay Off?

Chevrolet has no shortage of ambition or marketing instinct, and the Malibu XL now rolling out may be what carries its image beyond young, entry-level buyers to its whole lineup.

"I'm 26 this year, and my dream is that by the time I'm 30, Chevrolet will be selling 1 million cars a year in China."

However much Jaymer Starbody, an American born in the 1990s, likes working for General Motors, and however much he may truly love the Chevrolet brand, having him speak for Chevrolet through a dream is, of course, a piece of public relations staged by Chevrolet. A stunt like that needs a legitimate link, and he has one: he is the exterior creative designer of the Malibu XL. Hence the second half of his sentence: "The Malibu XL is a very important step toward making that dream come true."

The approach takes some of the seriousness out of a brand strategy. Even so, it takes nerve to tie the ninth-generation Malibu now being promoted to Chevrolet's China sales over the next five years, and even to its global sales, especially when the car comes from Chevrolet, America's most everyday brand.

You can read this as boldness and conviction: why not let young people do the most important job, since they understand young people best? Or you can read it as anxiety and pressure: the youth market matters so much to Chevrolet that it is going all in.

"We have only one goal: we want to win. All of us have very high expectations for the Malibu XL, not just in North America and China but in the global market." That was how Margaret Brooks, global executive director of product marketing for the Malibu, answered when QDaily asked what goal had been set for the car.

Chevrolet has pinned many hopes on the new Malibu. It is regarded as the flagship of Chevrolet's upper-mid-size sedans. The name comes from Malibu Beach in Los Angeles, where, it is said, half of Hollywood's stars own villas. When it went on sale in 1964, the Malibu was meant for America's newly rich, a class moving up in society, and it targeted young middle-class families. The seventh generation sold more than 700,000 units in North America and won the 2008 North American Car of the Year title. With 198,770 units sold, the Malibu was also GM's best-selling passenger car in 2010. Last September, cumulative global sales of the Malibu passed 10 million.

But problems had already begun to show. The eighth-generation Malibu of 2013 got a cool reception, and Chevrolet had to rework the styling and interior of the 2014 model. According to Wall Street Journal data, US sales of the Malibu fell 4% year on year in April 2014.

The mid-size segment the Malibu competes in is the biggest in the US car market. Of the 16.5 million vehicles sold in the US in 2014, 2.4 million were mid-size cars, a 14.5% share. The Malibu ranked sixth, behind the Hyundai Sonata (188,000 units), and sold less than half as many as its main rival, the Toyota Camry.

In China, GM's retail sales reached 3,612,635 vehicles in 2015, up 5.2% year on year, and China remained GM's largest single market in the world. But sales of its Chevrolet brand fell 9.7% to 612,024 vehicles. China is now Chevrolet's second-largest market worldwide.

Chevrolet entered China as early as 2005 but did not bring in the Malibu until 2012. At first, high pricing and other factors held sales to about 3,000 units a month, far short of the roughly 10,000 a month that rivals such as the Toyota Camry, Volkswagen Passat and Honda Accord managed. Things improved only after price cuts of 20,000 to 25,000 yuan. According to Xuanche.com, the Malibu sold just over 80,000 units in China in 2015, while the Camry and the Accord sold nearly 130,000 each.

The continuing SUV boom in China has also squeezed sedans, and Chevrolet has no SUV of any note in China.

As locally built luxury cars keep getting cheaper, more and more young people choose a luxury brand for their first car, and they care more about individuality than about the practical needs of their parents' generation. With Chinese consumers trading up, Chevrolet hopes the Malibu, a model with deep roots in the US, will not only sell well in China but also lift the image and character of the whole Chevrolet brand. That will not be easy.

"We feel the Malibu XL is a brand-new opportunity for Chevrolet," Brooks said. The car is vital to Chevrolet, and to GM as a whole. Forbes called it a big opportunity for GM. If the Malibu succeeds, GM gains a foothold in the largest new-car segment in the US, and that success would justify more investment, leaving room for deeper discounts and a more competitive sedan.

The new Malibu differs sharply from its predecessor. It keeps some Chevrolet family design cues, but the body sits 7 mm lower, so the whole car looks stretched sideways, low and sleek. The rugged look of American cars is gone; it feels closer to a German car. It is also 136 kilograms lighter than the previous generation, a point Chevrolet has been promoting hard.

So when the car made its US debut, Chevrolet turned it into something like a carnival.

Last December in Palo Alto, California, it staged what amounted to a global media event. The Malibu's chief engineer, Chevrolet's exterior design director, the Malibu's global executive director of product marketing, the performance lead, an infotainment engineer and a string of other executives took turns on stage. Afterward, journalists drove the not-yet-launched Malibu XL down US Highway 1 from Palo Alto to Malibu Beach in Los Angeles.

According to Brooks, the new car will be sold in 18 countries, and China, the US, Canada, South Korea and the Middle East are its five most important markets. China ranks first among them.

There is no need to say more about how much China matters. Chevrolet aims to sell more than 1 million cars in China by 2020. From last year's tally of just over 600,000, that means growing sales by at least 10% a year for each of the next five years.

Two weeks later, Chevrolet signed Zhang Zhen as the Malibu XL's endorser in China. "We feel he is the right choice," Sharon Nishi, head of marketing for Chevrolet at SAIC-GM, told QDaily.

This is not the first time the Malibu has had a celebrity endorser. When it entered China in 2012, the face of the car was the famous Tony Leung Chiu-wai. If you don't remember that, it may show the campaign was not a great success, even though Leung was the bigger name and the campaign drew plenty of attention. But as a match for the product, Leung was neither American nor Chevrolet.

What matters more, of course, is making GM's Chevrolet younger.

Making a car brand younger always goes hand in hand with entry-level cars, and there Chevrolet has a head start: the Cruze, Sail and Aveo have built fairly strong brands in the entry-level and compact segments. In 2015 the Cruze and Sail ranked 8th and 11th in China's sedan sales, even though their sales fell 7.5% and 14.5% respectively.

Another idea tied to youth is striving. Carmakers slip into this language easily. It is not a bad label, but something always seems missing. Our earlier report on carmakers chasing young buyers looked closely at those efforts.

But the cars that sell themselves as young are not cool enough.

Chevrolet wants Zhang Zhen to make it look cool. Compared with Tony Leung, Zhang has always stayed in niche territory, and you have to admit that niche is, more often than not, closer to cool. Compared with today's young pop idols, he is seen as having more presence and taste. Since he appeared on the Spring Festival Gala last year, more and more people have come to know him, and roles in the films The Assassin and Monk Comes Down the Mountain made him one of the most talked-about stars of 2015.

You can see Chevrolet's calculation. But how much of Zhang Zhen's cool will rub off on the Malibu is hard to say. Nor is it certain that his cool will keep rising.

Sharon Nishi told QDaily that Chevrolet's goal has shifted from being a brand for young people to being "an international car brand loved by creative, action-oriented, mainstream core consumers." Put plainly, Chevrolet wants a broader audience, and as you have probably guessed, that means the young middle class that brands in every industry are courting.

Advertisers tend to label these people as elite, professional, creative and action-oriented. At the end of last year, when the Malibu XL's exterior was unveiled at the Guangzhou Auto Show, Chevrolet also upgraded its brand slogan from "Love What I Love" to "Love · Chase Dreams Together." The Malibu targets the upper-mid-size market and hopes to win over the young middle class.

According to the 2015 China Automotive Consumer Insights Report, published in November by the consultancy Roland Berger and the car website Yiche, buyers under 35 now account for 54% of all car buyers. The 25-30 and 31-35 age groups rank first and second, at 23% and 18%.

So whatever label gets attached, cool remains a must for buyers of mid-size cars. People around 30 still see themselves as young. They don't want to look stuffy, and most of what they buy is much like what younger people buy.

Cars are the one exception. And nowhere in the world is there a cool car with a cultural label for us to feel.

If you don't know how to get Chinese people to buy your car, make it longer.

The Malibu is no exception. The latest Malibu XL measures 4,923 mm × 1,854 mm × 1,470 mm, with a wheelbase of 2,829 mm. Compared with the eighth-generation Malibu, the body is 53 mm longer, the wheelbase 92 mm longer, and rear legroom 33 mm greater. Officially, the name Malibu XL stands for "Cross (X) Limits," breaking boundaries. Going by the numbers above, though, you might simply read it as a longer, bigger Malibu.

And since design is now the first thing post-1990s buyers look at when choosing a car, the Malibu's publicity keeps stressing what is special about its design. John Cafaro, Chevrolet's executive design director, said the Malibu XL's design started from a completely blank sheet of paper, with design teams from around the world taking part. The first sketches drew on the shapes of beaches and waves, and Jaymer Starbody even sketched at the event to show how the shape of a wave becomes the line along the car's side. The three-part beltline makes the body look more sculpted and catches the eye. Because the whole car is longer and lower, it looks closer to a coupe and so looks more dynamic.

To attract young buyers, the Malibu puts more effort into its interior. At the center of the dashboard is an 8-inch high-definition color touchscreen, with a slot beneath it sized to hold an iPhone. And because young people want to be online all the time, the Malibu comes with in-car 4G Wi-Fi. But these so-called new technologies meant to please the young have already spread to many entry-level cars.

Chevrolet has also lined up a lot of advertising for the car in China. Zhang Zhihong, the Chevrolet brand director in charge of the campaign, told QDaily: "It will be 360-degree, all-round communication, including traditional print, digital, TV commercials, outdoor, content marketing, entertainment marketing and more." He would not disclose the budget but said it is bigger than for the Malibu's 2012 launch, when the "Heart Returns to Malibu" commercial with Tony Leung alone reportedly cost tens of millions of yuan.

The Malibu XL goes on sale in China on February 27, and you may soon see Zhang Zhen everywhere. It is positioned as Chevrolet's flagship mid-size sedan. According to Sharon Nishi, it targets the top of the upper-mid-size price range, while the new Malibu already on sale in China aims at the mainstream mid-range market. This "two Malibus" strategy resembles the "two Juns" strategy that GM's Buick brand uses with the Junyue and Junwei, sold abroad as the LaCrosse and Regal.

After a muddled start in China, Chevrolet relied on the Cruze and Sail to make itself a car brand for young people. As a symbol of ordinary American consumption, it strikes a deep chord in the US. Remember the line from the American series Mad Men, when Leo Burnett is tempting the protagonist, Don Draper: "That's a Chevy"? The nickname Chevy itself says something about the brand's place in America.

Chevrolet has no shortage of ambition or marketing instinct, and the Malibu XL may be what carries its image beyond young, entry-level buyers to its whole lineup. By 2020, Chevrolet will bring 20 new models to China, including upper-mid-size cars and SUVs.

What Chevrolet must avoid in China is the wrong turn Volkswagen took. With little brand heritage or cultural depth behind it, Volkswagen, however broad its lineup, ended up as the butt of a well-known joke: every car is a Passat, and every car is some variation on the Golf.