THE MOTLEY FOOL
GM's Chevrolet Impala has been known as a fleet vehicle, but it won't be for long. Image source: General Motors Company.
The quality of passenger cars offered by Detroit automakers has slowly improved, and General Motors (NYSE: GM ) is hoping its redesigned Impala can help the automaker change its image once and for all.
In fact, GM recently released some information that should have investors and consumers optimistic about the new direction the Impala is taking.
What's the story?
One of the biggest knocks against the Chevrolet Impala in the past has been its reputation as a fleet and rental vehicle. Last year nearly 90,000 Impalas were registered at rental car companies, which made it the No. 1-selling rental car for the second consecutive year.
In fact, according to Kelley Blue Book, nearly three-fourths of 2013 Impalas ended up on rental lots for traveling consumers to hop in and drive off, a staggeringly high number. To put that in perspective, only 16 models in the U.S. had rental sales accounting for more than 30% of overall sales -- and the Impala more than doubled that percentage.
To improve the image of its flagship sedan, and thus its entire lineup of passenger cars, GM knew it needed a new strategy with the Impala. The company decided to change the target consumer from fleet and rentals to retail consumers like us.
The reasoning behind GM's decision to pull back fleet sales is simple: It was a strategic move that would improve the image and residual value of the vehicle, as fleet and rental sales have historically been viewed as low-margin and less financially healthy.
To raise the stakes a bit, if GM doesn't prove it can design and produce a quality passenger car now, with its flagship Impala, it's going to be a rough couple of years as the automaker continues through its most aggressive vehicle portfolio refresh in history.
Long story short, GM needs the Impala to be a hit with retail customers, not rental. The good news: The Impala is definitely going in the right direction.
GM's 2014 Chevrolet Impala. Source: General Motors Company.
Fortunately for GM and its new strategy, the Impala is slashing the percentage of overall sales that are generated from rental business. Thus far through 2014, 54% of Impalas were sold as rental cars -- but that figure doesn't tell the entire story.
This year accounts for sales of some 2013 models, which were still designed for heavy rental volume, along with the redesigned 2014 Impala. When looking specifically at 2014 Impala sales, only roughly one-third are going to be rentals -- a substantial improvement from nearly three-fourths last year.
While that's a step in the right direction, the 2014 Impala still needs to prove to retail consumers that it's a worthy product, or the change of sales strategy will be for naught. Again, fortunately, the Impala looks to be breaking ground for GM and American automakers in general in a vehicle segment in which they were once left for dead.
"The Impala's performance is one more indicator of an emerging domestic renaissance," said Jake Fisher, director of Consumer Reports automotive testing.
In fact, the 2014 Chevrolet Impala was the first American sedan in two decades to earn Consumer Reports' top score -- a segment historically dominated by Japanese automakers.
Ultimately, for consumers and investors, General Motors has a long way to go to reverse the negative image it gained from its bankruptcy and tragic recalls earlier this year. However, completely reversing the image of its flagship sedan is a solid first step -- even if it's a baby step.
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