Chevy's New Cruze Could Bolster Profit and GM CEO's Standing

NEW YORK (TheStreet) -- When General Motors' (GM) next-gen 2016 Chevrolet Cruze compact family sedan reaches dealer showrooms early next year, it will offer Apple (AAPL) CarPlay and Google  (GOOG) Android Auto dashboard mirroring formats for smartphones.

In a briefing in Detroit last week, GM also announced 40-mile-per-gallon efficiency from Cruze's most fuel-thrifty engine, more interior space, advanced safety features like frontal crash alert and cutting edge infotainment features that could justify higher prices and generate up to $2,000 more operating profit per Cruze.

The profit improvement for Cruze will interest investors the most, as Mary Barra, GM's CEO, pushes toward the goal laid out last fall to achieve a 10% profit margin in North America on an earnings before interest and tax-adjusted basis in 2016.

In the first quarter of 2015, GM's adjusted profit margin for North America was 8.8% -- reflecting a record adjusted profit for the period.

Six years after GM's bankruptcy and reorganization by the U.S. Treasury, the automaker's shares remain stuck at roughly the price of their initial public offering in 2010. Barra has rejected discussing a potential alliance or merger with Fiat Chrysler Automobiles  (FCAU), which adds to the pressure to notch investment results by going it alone.

GM's profitability rests disproportionately on full-size pickups like the Chevrolet Silverado and variants such as Chevrolet Tahoe. A "win" in financial terms for the 2016 Cruze against competitors such as Honda's  (HMC) Civic and Toyota's  (TM) Corolla could reinforce her argument that GM's vehicle portfolio is becoming more balanced and sustainable than the one that collapsed in the last recession.

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