GM's Big Bet on the Made-in-the-USA Sonic Subcompact

General Motors (GM) is making a big gamble with the $14,000 2012 Chevrolet Sonic, a made-in-the-USA subcompact that needs to be excellent -- and profitable -- if it's going to compete with the Ford Fiesta in the suddenly hot ultra-small car segment.

The phrase "competitive American subcompact" was, until the appearance of the 2011 Ford Fiesta, a virtual oxymoron. The Big Three went decades without producing the kind of credible small car that are turned out in great numbers by automakers in Europe and Asia. And they almost never made them on American soil.

Years of neglect
That was OK when very small cars barely registered on the sales charts. In the early 1980s, subcompacts were just eight percent of GM's U.S. output. The American automakers farmed out and then rebadged foreign small cars because Detroit, notoriously, couldn't build them profitably in the U.S. Ford, for instance, relied on Mazda to produce its subcompacts because the Japanese automaker could build them with 25 percent fewer labor hours.

Expensive gas has re-jiggered consumer priorities, and in June the compact Chevrolet Cruze was the bestselling car in the U.S. Ford has the Focus and the Fiesta in its small car fleet, and sales show we're in a new world. Focus sales in June were double that of the once very popular Explorer. The subcompact Fiesta, with 5,535 units moved in the month compared to the Focus' 21,385, isn't yet in the same league, but Ford described both cars as "the fastest-turning models in Ford dealer showrooms."

The Cruze/Sonic team
And now GM needs the Cruze and (right below it) the Sonic to be an equally formidable team. The Sonic, replacing the lousy made-in-Korea Aveo, offers economy-minded Chevrolet buyers a real alternative. It's eight inches shorter than the Cruze (whose entry-level model costs $2,500 more), weighs 500 pounds less, and delivers the critically important 40 mpg on the highway.

The Sonic will also give buyers a chance to get into a five-door hatchback, a format that is coming in the Cruze after an introduction in Europe. Hatchbacks were until recently a dead format, but they're huge again. Half of the Fiestas sold in the U.S. are hatchback versions.

The Sonic, which goes on sale in the fall, is being built in the Detroit suburbs -- which, as the New York Times points out, makes it "the only subcompact car being built on American soil." And that's the biggest crapshoot of all.

Shrinking the factory space
To keep U.S. production from being a disaster, GM has given its factory a big makeover. The Michigan assembly line is half as big as it used to be when it churned out Buick Rivieras, and now makes extensive use of robots and efficiency reforms to reduce the workforce (which, through a cooperative agreement with the United Auto Workers, is making a starting salary of $14 an hour instead of the more usual $28).

Ford is building the Fiesta in Mexico. The 1976-1987 Chevette was the last GM subcompact built in the U.S. Because Americans were starved for a U.S. small car, it managed to be the bestselling small car in 1979 and 1980, but its bad quality reputation eventually caught up with it -- Chevettes were no match for the Toyota Corollas and Honda Civics of the period.

Gotta be good
As American automakers do, GM lost interest in the Chevette and let it soldier on with few improvements. That can't happen with the Sonic. I've seen pre-production versions at auto shows, and the car looks promising. GM's Charlie Mott told me last year:

Instead of importing a vehicle designed and engineered abroad, we're starting from scratch to develop a car that benefits from our product development expertise.

The good news is that the Sonic is widely reported to handle well, and a 1.4-liter turbo version is lively. That's really important, because cars in this segment can be slugs. If the Sonic is good, it can erase any lingering bad memories of the Chevette, Vega and, lest we forget, the Aveo.

Related:

• General Motors Gets Serious About Small Cars