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Redesigned ’97 Minivans, Cars Represent Big Test of the New GM

August 9, 1996

TRAVERSE CITY, Mich. (AP) _ Eighteen years after General Motors Corp. decided against making a minivan, the automaker will soon find out if it has learned anything from one of the most expensive mistakes in corporate history.

After giving away a huge market to Chrysler Corp., GM makes another try with a new generation of minivans due to hit showrooms soon.

The minivans are part of a major product overhaul at GM for 1997. The automaker will replace a third of its domestic product line.

How well the new vehicles sell will be seen as a sign of whether GM’s latest efforts to improve the way it develops and markets its products have worked.

``The next 12 to 18 months are critical for the new General Motors, given the substantial number of new products being introduced,″ industry analyst Scott Merlis said Friday at the University of Michigan’s annual automotive management conference.

Vincent P. Barabba, GM’s corporate planning chief, cited the company’s experience with minivans as an example of the old GM’s failure to use its skills to produce vehicles that customers want to buy.

In 1978, the company misinterpreted its own research that showed potentially huge demand for a minivan. GM executives concluded the minivan would cannibalize profitable sales of station wagons.

Ford Motor Co. also rejected the minivan concept, in large part because it lacked a front-wheel-drive assembly deemed crucial to the product’s design, Barabba said.

Chrysler introduced its minivan in 1984, helping to sustain the company’s remarkable turnaround. The minivan did devastate station wagon sales, and for years Chrysler had the new market to itself.

When GM finally introduced its ``late and not-so-great″ minivans in 1990, they lacked the broad appeal of Chrysler’s product, Barabba said. But with GM’s second generation of minivans due in showrooms soon, ``we got it right this time,″ he said.

The new minivans and cars also are a test of GM’s ability to correct a fundamental problem: its failure to create distinct identities for vehicles built on the same basic platform _ the chassis, drivetrain and other major components.

Barabba acknowledged that GM squandered its ``brand equity″ in the 1980s, when it became impossible for many customers to distinguish a Chevy from an Oldsmobile from a Buick from a Pontiac.

``In the past they’ve mostly competed with each other rather than with other vehicles,″ he said at a news conference.

Barabba insisted that won’t happen with the new minivans and cars.

``The will not look alike. They do not ride alike, their performance is profoundly different, and they will not be positioned in the marketplace alike.″

These are the first new GM vehicles since the company’s switch to a ``brand management″ system, in which GM focuses each vehicle on a specific group of buyers that won’t be targeted by other GM products.

By 2000, GM hopes to have one vehicle in its lineup for each consumer group it has targeted.

GM already has shown significant cost savings in the design of its new minivans and midsize sedans, Merlis said. He estimated those new products alone will add $2 billion to GM’s bottom line.

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