GM Pulls Plug on Hybrid Model

By JOHN D. STOLL and SHARON TERLEP

General Motors Corp. has pulled the plug the hybrid-electric version of the Chevrolet Malibu sedan for the 2010 model year due to slow sales that has led to a backlog of inventory of the vehicles on dealer lots.
A GM spokesman said the company made the decision because of a "sufficient stock of 2009s," and said starting up production in the near future is "possible, but not likely." The company will continue to make hybrid versions of the Malibu for fleet buyers, but it is uncertain if GM will ever produce the Malibu hybrid for retail consumers ever again.
GM introduced hybrid-electric versions of the Chevrolet Malibu in 2008 in an effort to boost its portfolio of fuel-efficient models. But like many other auto makers offering hybrid versions of their vehicles, the hybrid Malibu has returned disappointing results and Chevy dealers are not ordering them any longer.
"We could care less," said Joe Menegos, sales manager at Ron Baker Chevrolet-Isuzu in National City, Calif. He noted the hybrid Malibu only gets what he described as marginally better fuel economy and said that the price is more expensive.
A base Malibu, carrying a four-cylinder engine, costs about $22,300, and a hybrid version, which uses a battery to help propel the vehicle, is about $4,000 more. Both models achieve 34 miles-per-gallon in highway driving, according to GM.
The Malibu sedan is a key product for GM and was redesigned for 2008 in order to better compete with Japanese competitors, such as the Honda Accord and Toyota Camry. Conventional versions of the Malibu, powered by traditional internal combustion engines, have been well received.
Toyota Motor Corp. is the only large auto maker in the U.S. to have a hot selling hybrid vehicle, the Prius sedan. But with the U.S. market slumping and demand for fuel-efficient vehicles being volatile, Toyota has been forced to offer big incentives -- including 0% financing for 60 month loans and $1,000 rebates -- in order to boost demand.
GM offers several trucks with hybrid engines, and those vehicles also sell in low volumes.
GM will continue making hybrid versions of its trucks, including the Chevrolet Silverado and Cadillac Escalade, in 2010. Hybrid vehicles carry much higher price tags than conventional cars and trucks due to the added cost of battery technology.
GM's decision to sell Saturn to auto retailer Roger Penske will put a further dent in GM's hybrid portfolio because that brand offers two hybrids -- the hybrid Vue crossover and the hybrid Aura sedan -- that will no longer be sold under the GM umbrella.
The GM spokesman said the auto maker continues to develop hybrid technology for future applications. The company plans to launch the Chevrolet Volt extended-range electric car in 2010, but the cost of that sedan is expected to be much than conventional hybrids.
GM, which filed for bankruptcy last week, posts substantial losses on every hybrid Malibu it builds. It has been under pressure in recent years to be more active in the hybrid market in recent years despite the red ink associated with the vehicles.
Honda Motor Co. recently launched the Insight hybrid to compete with Toyota. Nissan Motor Corp. and Ford Motor Corp. have also made forays into the hybrid vehicle market.
Ford recently launched the Fusion sedan hybrid, aimed to go head to head with the Prius and hybrid Malibu.
Write to John D. Stoll at john.stoll@wsj.com and Sharon Terlep at sharon.terlep@dowjones.com