GM's Refurbished Chevy Trax Subcompact Motors Into a Crowded Field - TheStreet

Auto companies don't often invest hundreds of millions of dollars to redesign the interiors and exteriors of vehicle models when they've only been on sale for barely two years.

But General Motors (GM) - Get Report has done so with its 2017 Chevrolet Trax subcompact, the company's entry into one of the hottest segments in the U.S. automotive market, and one that's about to become even more competitive. With buyers migrating to crossovers and SUVs of all sizes from sedans, the pressure to stay up-to-date and fashionable grows more intense.

Built in South Korea, the new Trax offers infotainment features such as Apple Car Play and Android Auto, formats that permit driver and passengers to use some of their smartphone apps on the instrument panel screen, thereby reducing distraction. The refreshed styling is smart and crisp without being flashy.

"With Trax we've developed a vehicle that's suited to what customers need today at a very affordable price," said Alan Batey, president of GM North America and head of the global Chevrolet brand. The model starts at about $21,000, a price that rises to more than $28,000 with leather upholstery and other options.

Buyers of Trax tend to skew female and often are urban dwellers.

Trax is powered by a relatively ineffectual 1.4-liter engine that develops 138 horsepower. "Unfortunately," writes Kirk Bell of The Car Connection, "the little four struggles to get up to highway speeds and requires plenty of space when passing."

The segment leader is Fiat Chrysler Automobiles' (FCAU) - Get Report Jeep Renegade, a runaway hit. Honda's (HMC) - Get Report HR-V also does well, with Trax currently in the third spot.

According to Kelley Blue Book, subcompact crossovers and SUV sales in the U.S nearly reached 215,000 for the first eight months of 2016, up about 65% in an overall vehicle market that was about flat.

GM executives aren't satisfied with third place, and they risk falling even further behind when Nissan (NSANY)  adds a version of its Kicks subcompact crossover, which was recently introduced in Brazil during the Olympics. Toyota (TM) - Get Report  also has no entry in the segment either, though is expected to announce a new model at the Los Angeles Auto Show in November.

The question for automotive planners is how to stretch limited budgets for styling and technical upgrades across their model lineups, keeping in mind that sedans are becoming less and less popular, justifying less investment.

In Chevrolet's case, its restyled Malibu family sedan is up more than 14% in a segment that's down more than 11%. GM may choose to refurbish crossovers more quickly than the next Malibu if customer interest in models like Trax keeps rising.

Doron Levin is the host of "In the Driver Seat," broadcast on SiriusXM Insight 121, Saturday at noon, encore Sunday at 9 a.m.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.