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GM Cruzes to No. 1 on small-car revival

Mike Sussman is one of the buyers helping General Motors Co. come back in the small-car business. The 45-year-old systems analyst just traded in a Toyota Prius for GM's Chevrolet Cruze, seeking both high mileage and more pep.

"I was very, very leery about buying U.S., to be honest," said Sussman, who lives in Greensboro, N.C. "They got me with the mileage. It actually drives like a regular car. With a Prius, you always feel like you're driving a science experiment. It just doesn't have a lot of guts."

The Cruze was the best-selling U.S. compact in July at 24,648 cars, beating the Toyota Corolla, Hyundai Elantra and Ford Focus, and it outsold cars of any size in June. GM has found the sweet spot in the market, pricing the Cruze at as little as $16,525, between the Corolla and the Prius, and delivering mileage of 30 miles per gallon or more.

The Cruze helped make GM the world's top seller of vehicles in the first half, a ranking it lost on an annual basis in 2008, the year before the company's government-backed bailout. The company's rise in the small-car market is emblematic of a turnaround for the automaker.

GM's U.S. market share rose to 20 percent in this year's first seven months, from 19.2 percent in the year-earlier period. Passenger cars accounted for 42 percent of the Detroit-based company's sales, compared with 39 percent last year, according to Autodata Corp. of Woodcliff Lake, New Jersey.

While GM's small-car revival has followed the March 11 natural disasters that delayed production at Toyota Motor Corp. and Honda Motor Co., the spurt may not be an anomaly. GM is benefiting from improved cars and new advertising plus missteps by the Japanese rivals, analysts and executives said.

"We're competitive for the first time ever," Joel Ewanick, GM's chief marketing officer, said.

The March earthquake and tsunami in Japan caused a shortage of parts and finished vehicles. Through July, sales slid 8.1 percent for the Toyota Corolla and 9.7 percent for Honda's Civic.

"If the vehicle you want isn't on the showroom floor, who knows if you're going to be waiting for the deliveries to come in when there's something equivalent in terms of performance capabilities and fuel-efficiency?' said Chris Hopson, analyst with IHS Automotive, a research firm based in Lexington, Massachusetts.

GM has sold 147,620 Cruzes in the U.S. this year through July, more than the 74,427 Prius sold during that period while still trailing Corolla at 154,324. Cruze sells for $16,525 to $22,920. Prius sells for $23,520 to $30,000 while Corolla's price range is $15,900 to $17,770.

Both GM and Ford Motor Co. have marketed their compact cars with high-tech features and made them more attractive than previous low-priced economy car models, Hopson said.

Ford has advertised the Sync voice-activated entertainment and phone system in the Focus since its 2007 introduction and in the subcompact Fiesta since the car debuted in the U.S. in 2010.

GM's television ads also plug high-tech features in the Cruze. One ad shows how consumers can unlock their car remotely using an OnStar connection through a smart phone. In another commercial, a motorist gets Facebook updates while driving.

The automaker also took a page from Toyota's 1989 introduction of its Lexus luxury division. GM ran ads touting accolades the car received in the motoring press, Ewanick said.