MALI-BUCKS: Discounts had dragged down pricing for Malibu but redesigned model expected to be financial success

Sharon Terlep / The Detroit News

MEMPHIS, Tenn — Even though the sticker price has barely changed, General Motors Corp. could rake in $5,000 more on each new Chevrolet Malibu it sells compared with the old models, GM Vice Chairman Bob Lutz said Wednesday.

Pricing and profit on previous years’ Malibus were dragged down by deep discounts and heavy sales to daily rental companies. A 2007 Malibu sells for about $2,800 below suggested retail price, according to Edmunds.com.

Lutz said the redesigned Chevy four-door, which hits many showrooms for the first time today as a 2008 model, will command a higher price premium.

If the prediction proves true, Lutz said the dramatically made-over sedan would be a financial success even if GM sells no more Malibus next year than in 2007.

"My bet is that we’re going from a car people have to be bribed to take, to a car people will actually pay for," said Lutz, in Memphis for the Malibu’s official rollout. "If it doesn’t work, everyone will say, ‘Lutz screwed up.’ "

After more than a decade of neglecting passenger cars, GM has hung its hopes on the Malibu as the product that will loosen Toyota Motor Corp. and Honda Motor Co.’s unrelenting grasp of the largest U.S. vehicle segment.

The midsize sedan market draws about 2.7 million U.S. car buyers a year. Toyota sold 360,000 Camrys through September and Honda sold 302,000 Accords in contrast to GM’s barely 90,000 in Malibu sales.

GM has poured what Lutz called the automaker’s best efforts into making the Malibu more stylish and luxurious than the competition.

"Right now, we don’t know how to do better than this," he told reporters at a gathering on Tuesday.

Pricing for the new Malibu starts at $19,995 for the base model to $22,790 for the hybrid version.

A typically equipped 2007 model was listed at $20,637 and sold for $17,864, according to Edmunds. The Malibu discount is far deeper than price cuts required to move Camrys and Accords, which typically sell for within $1,500 of asking price.

Dealer Carl Moyer, of Karl Chevrolet in Ankeny, Iowa, has seen early proof that the Malibu will bring in bigger bucks.

He was one of the first dealers in the country to get one of the cars, receiving a single Malibu last weekend. A number of customers rushed to the showroom to get a look, and several made offers. Moyer turned down each one until he got a buyer willing to pay full sticker price.

"People are really awed by that crazy car," he said. "On these new Malibus, we just feel like people should bring the window sticker. They’re worth the money."

While the new Malibu is earning high praise from critics, boosting average sales price by as much as $5,000 will be a tough task for GM, said Jesse Toprak, executive director of industry analysis for Edmunds.

The earliest reaction to a new vehicle is usually the strongest, and it will take at least three to six months to gauge the vehicle’s actual success, he said.

Not only would GM need to all but eliminate incentives, it also would have to sell the vehicle at higher, more expensive trim levels and cut sales to daily rental fleets by half or more.

As many as 40 percent of old Malibus were being sold to fleets in some months, a practice that lowered the vehicle’s values because it saturated the markets and cheapened the brand’s image.

"If they’re able to sell without a lot of incentives, as with any domestic vehicle launch, that’s a good measure of success," Toprak said.