The 2018 Chevrolet Traverse Has Potential To Boost GM’s Profitability

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General Motors (NYSE:GM) showcased the new version of the Chevrolet Traverse mid-size SUV at the North America International Auto Show recently. The 2018 version of the vehicle is an eight-seater vehicle with a lush interior but a lighter body offering better handling and improved fuel efficiency. The model is a popular substitute for minivans, a segment that grew at 8% in 2016, i.e. faster than the overall market.

This segment is not one of the largest in the auto market but a new vehicle launch usually fetches higher prices. The 2016 version of the vehicle sold at a price of around $29,000. A 10%-15% increase in pricing due to the new model launch effect and a 10% increase in unit sales could lead to higher profits for the company. Moreover, the scope for growing unit sales is quite large. Compared to its competitors from Ford and Toyota, Traverse sells a much smaller number of units. If the company can poach some customers from Ford and Toyota, the additional profit added to GM’s bottom line could be much higher.

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In 2016, the overall segment grew by just 3% but individual models like Toyota’s Highlander and Hyundai Santa Fe did much better, growing at 20.4% and 11.1% respectively. The new model for Chevrolet Traverse has the potential to do the same for GM and as a result it could help boost the company’s bottom line.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for General Motors

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