City of Flint grants multi-million dollar tax break for GM engine plantEnlarge Photo
Along the same lines, GM executives cited the need to improve profit margins on the small car as the reason for the relatively high price. Small cars traditionally have been sold as volume cars with low profit margins, while any money lost in keeping its volumes up could be regained through profits on SUV and truck sales, but that model has now collapsed with the SUV and pickup market. One upside, however, to the SUV's fall from grace is that manfuacturers are finding it easier to sell premium small cars.
While pricing for the Cruze is still under wraps, car prices on the whole are increasing due to new features being offered - which in the Cruze includes more interior space, better fuel economy and some "unique content and materials," according to Chevrolet's General Manager, Ed Peper, reports MSNBC.
Edmunds reports that currently car purchasers pay an average of $19,184 for a Honda Civic and $18,232 for a Toyota Corolla, both in similar segments to the upcoming Cruze. Whether or not the Cruze's price will come under $20,000 is still uncertain, however it will certainly get close to this important psychological barrier when it arrives in 2010. Tipping over that hurdle may mean customers won't be as willing to cross-shop the Cruze with its Japanese rivals, and it's not likely that the GM car will carry the cachet necessary to compete with premium small-sedan offerings from the more luxury-oriented brands, potentially leaving it in a marketing no-mans land.