GM Drawing Up Contingency Plans for Boosting Production of Smaller Vehicles
25 October 2005
The Financial Times reports that General Motors is drawing up stand-by plans to boost production of smaller vehicles in case the recent increase in US demand for fuel-efficient cars and light trucks continues into next year.
In an interview with the paper, Rick Wagoner, chairman and chief executive, said it remained unclear whether this autumn’s spike in gasoline prices had caused a permanent shift in US drivers’ preferences, but the company had to be prepared.
“If we look at the sales trends of the past 45 days and extrapolate those for next year, it results in a significantly different production plan from what one would have thought 45 days ago,” he said in an interview with the Financial Times at GM’s Detroit headquarters.
“We’re asking ourselves about the robustness of the production forecast next year.”
GM’s planning comes shortly after the automaker announced a loss of $1.6 billion in the third quarter (earlier post), and a loss for the first nine months of 2005 of $4.1 billion.
Ford announced this month that it will increase production of its hybrids by tenfold by 2010, Toyota is ramping its hybrid production, and the major Asian automakers are all planning the introduction of new, smaller cars next year.
The GM Chairman predicted enough demand for the new T900 versions of its full-size SUVs (earlier post) to fill two factories and part of a third, which will also be able to build pick-up trucks.
GM is banking on earning a larger share of a shrinking market segment with its new SUVs, which will also be the first platform on which GM will apply its two-mode hybrid system.
Mr Wagoner said it was “highly uncertain” how much demand there would be for hybrids, which offer better fuel consumption but cost more. But he said GM was building more production capacity for hybrids than he expected to use.
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