GM Sees More Profit from Smaller Cars

General Motors Co.'s product chief, Mark Reuss, said the new versions of the high-volume Chevrolet midsize and small cars will earn the auto maker $1,500 to $2,000 more "variable profit" per sale than the models they replace.

Mr. Reuss, speaking to reporters at a product unveiling in Detroit, said the Chevrolet Malibu and Cruze have better margins due to better use of the company's purchasing and engineering scale. Vehicles in the small and midsize car markets often sell at high volumes, but are generally far less profitable than the trucks and SUVs that are popular with U.S. buyers.

The disclosure indicates GM may get a solid contribution from Chevy's bread-and-butter passenger cars in its quest to earn 10% operating margins in North America. The auto maker is short of that goal right now, which it has set for 2016.

Mr. Reuss also said GM is moving to an electrical architecture that will allow vehicle software to be upgraded via the cloud. The company is experimenting with that technology in some of its vehicles currently on the road, such as the Chevrolet Volt plug-in hybrid, but it will eventually be deployed on a larger scale. This will allow for faster software updates, Mr. Reuss said, and that will help GM keep up with a technology war that is bubbling up in the global auto industry.

Over-the-air updates are deployed by some competitors already. Mr. Reuss said GM has extensively tested the security of its over-the-air updates, including benchmarking Boeing Co. and the U.S. military, and is confident the auto maker can keep information safe, he said.

Write to John D. Stoll at [e-mail]

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