Tom:

We've discussed the Big 3's legacy costs here several times. A friend of mine who has been a line worker at GM for 25 years tells me that they lose money on small cars. It's understandable that they would focus on their most profitable vehicles, SUVs. GM alone has hundreds of thousands of retiree pension and health care costs to deal with.

People who want the company to die need to think of the consequences to the American economy if that should happen.

That said, an intractable organizational culture that goes back decades is part of the company's major problems.

Ultimately, if public sentiment really does change to smaller vehicles, it's their management's inability to see such change and direct their product development in the right direction that will kill the company. That GM developed these three concepts, as well as the Volt, might indicate that they DO have a Clue.

What will end up happening is that they'll build them in South Korea and China where they don't have the legacy costs to deal with.

Lutz and his media monkeys throw out "sensationalist" claims like these to scare the public into voting against those who demand higher fuel economy standards. I'd be curious to see how much money GM and other auto manufacturers have funneled into politicians' pockets in order to perpetuate the status quo.

E85 is not a viable solution. It is just a loophole GM and the domestics wish to fully exploit in order to continue selling their complete line-up of gas-guzzling V8s: Hemis, Hummers, Expeditions, Escalades, Explorers, Yukons, Suburbans, full-size pickups, etc., etc.

And when the market demands change (every time oil spikes the need to ween ourselves off of foreign oil is brought to the center of the American psyche)- the bureaucratic intertia of these companies (as evidenced in Lutz's comments) costs us thousands of US jobs in "restructuring."

Surely more must be done to pull the domestic leadership's collective heads out of the sand? How many more months of losses can GM, Ford, Chrysler absorb before they become a total burden (through bankruptcy and bail-out) on the US taxpayer?

I've voted with my checkbook- I bought an import for my wife and kids. And as soon as my domestic daily driver dies I'll probably be forced to buy another import.
This is no small task for a loyal & patriotic red-white-and-blue "only-buy-American" 18-year military servicemember.

So what? Find a way to make the car more affordable rather than whine about the price increase!

Statements like Lutz' are the death rattle of what's left of American ingenuity and competitiveness. We used to be able to do anything, and now it's just "can't, can't, can't."

It's really won't, won't, won't. He's playing to his thick-headed monster-truck customers. "The 'merican way of life is non-negotiable." Just plant more industrial crops and use more of our dwindling aquifers to feed E85 to the machines. Couldn't possibly make the machines better and more efficient, could we?

They've only got a few years left before reality hits them all over the head with a 4x4.

According to Wards Autodata
http://wardsauto.com/keydata/USSalesSummary0703.xls

Prius is #9 among cars in 1st 3 months of this year.
No SUV is in Top-10 among trucks.

There are 4 Pickups, 3 Vans, 3 CUV's.
Infact, CUV's are slowly sliding up and automakers are finding it hard to sell Pickups.

Pickups may also follow the trend of SUV's.

Time for Big-3 to rethink about the market.

Lets see, you raise the CAFE 4% a year, and some where down the
road the cost of this more efficient vehicle goes up $4,000-
$6,000 over the next 10 years. With the current US inflation rate, and the future money saved on MPG efficiency, due to higher oil prices from India and China getting in the game, it is a net gain to keep these Dollars at home. More countries will continue to compete for the same or declining oil output. With the ongoing slide of the dollar in foriegn currency markets, and the amount of US currency being held by Foreign oil producers, it is a net inflow of capital from Dollars that would have otherwise left this country to begin with. This savings would line the pocket of every person who has to pay interest on the Fedral Budget Deficit that is growing daily. That translates into more money supply to afford the very vehicle that is supposed to be "more expensive". Exactly who do you want holding and controling the future of our financial markets? Especially the The Federal Reserve! I prefer to have those people who produce the goods and services within this country to have a choice of where and how they spend their energy dollars. Financial security and National security are hand in hand. GM better get a grip before their shareholders loose theirs.

The short sellers kick back 4% profits from the Lutz churn machine; compounded that is... hmmm. How easy to quake the ranks with a single "press release." It's a security pump no matter how you look at it and... one of the oldest spin rackets in the business. Trick is to sell short now, buy back before the PHEV intro.

Hi All,

They could probably achieve a 4% increase by implementing the psuedo-atkinson cruise mode right now on the standard Honda Accord. That has to be like a less than $500 modification.

Put a little aerodynamics to work and they would probably up to 10 % improvement. I mean, these SUV's and Chrysler macho fronts ends are just plain billboard drag coefficients. Over the life of a car that costs nothing.

"meeting a 4% increase would require hybrid systems and other technology on nearly every vehicle and could add $5,000 to $6,000 to a vehicle's cost."

_That is if you do a decade's worth of fuel efficiency improvements in one year. The key is to ramp up component production smoothly, and rapidly to take exploit scale of economy. One year, its DI (injectors, pumps, etc), the next start-stop (microhybrid) parts. Continue this pattern over a decade, and GM will move all the way up to 2-mode hybrids (or its successor), and Tier2Bin5 (or better) diesels. Granted, this is a tight schedule to meet, but they must or they are doomed to shrink (in NA at least).

I believe many of you sincerely, truly, deep-in-your-heart want GM (and Ford and Chrysler) to "figure it out" and start providing more fuel efficient vehicles. Otherwise, why would there be so many posts complaining about these guys?

I personally think it's funny to see the sales numbers from the March report and then hear Lutz make those remarks. Ladies and Gentlemen, the market is speaking. If GM, et al. don't "figure it out" soon, then someone else is going to take the lead. It's that simple.

One final thought is the notion of GM, Ford, and Chrysler being good ol' red-white-and-blue. What American branded car does not have parts that come from some other country? What non-American car company isn't assembling cars here on US soil? The lines are blurred beyond distinction. The point is, it doesn't matter! We have cars built around the world by companies originating around the world. We're global.

T. Boone Pickens was quoted over at EV World as seeing oil hitting $80 per barrel this year. I doubt that if this occurs GM would wake up...what is the freaking point of voting on the next Chevy concept car if you have no intention of selling in the US? Liars...

The report, suvsolutions.org , is typical of government bureaucrats that quote sources who do not have to back up their claims with production vehicles.
The 20% fuel economy improvement claimed for direct injection is not attainable according to the most recent statements by BMW, Denso, Bosch etc in either a stoichiometric or lean burn engine.
When incorporating changes like these the final vehicle never achieves the projected improvements because the individual changes are not additive.

Dear GM,

Toyota will drive you into bankrupcy. How can they sell the Prius for $22,000?

Wake up now!

$5,000 or $6,000 dollar increase in price per car over 10 years or bankruptcy?

Frankly, the first option seems quite a bit better for GM, but given the remarkable, profitable performance of GM under men like Lutz, I'm inclined to believe that they will not actually pick the option that is good for the company.

As I have said before, the only way to save GM is to fire the lobbyists, and start building good cars.

Instead of wasting ethanol on E85 or even E10, let's see GM buy the rights to the Ford-MIT ethanol-DI engine.  Drop power by 20% (savings right there), then cut the size and weight of the engine in half through turbocharging.  The engine alone is 30%, the cut in power might save another 5%.  Cut the weight of the other components which used to support the original engine, add aerodynamic tweaks, you're probably up to 40% (and restore a lot of the lost performance).  There's 10 years of 4% improvements right there.

The reason GM "can't" do this is because GM is run by finance and marketing people, not engineers.  If GM listened to its engineers they'd have boatloads of fuel-savings in store, just like if Ford had listened to its engineers 15 years ago it could have had a PHEV out the door before the end of the Clinton administration.

You fools need to realize that all cars including the hybrids will be required to increase their fuel economy 4% per year. Your 40 mpg car will have to get 41.6 mpg next year, 43.3 mpg in 2009, 45 mpg in 2010 and will have to get 59.2 mpg in 2017.
Have any of the car manufactures increase the fuel economy for a specific model, engine and transmission in the last 5 years? New models will have to increase at this same 4%, so if you start low you will have a better chance of making the incremental increase.

This is total manure. These companies are capable of giving us cars capable of going 40-50 mpg, but they are telling us it will cost 5,000-6,000 more?! What's the foreign cars makers excuse then?! To hell with GM and Ford! Make them produce these cars with any means necessary!

Morover, they need to get rid of their "Big Oil" stockholders and start shipping those concept cars that never get shipped.

Why small or fuel efficient car should be exclusively from GM? On US market there are small Honda Fit (33/38 mpg), Mini (32/40), Nissan Versa (30/34), Toyota Yaris 34/40. For GM lovers there is Kia Rio (32/35). Sales of these cars are sluggish, because much more versatile and powerful Corolla (32/41), Sentra (28/34), Civic (30/38) offer comparable fuel efficiency and much more bung for a buck. For seriously fuel-consumption-savvy there are Prius (60/51), Civic hybrid (49/51), or bigger Camry hybrid (40/38). Mini, Civic, and all hybrids are highly technically sophisticated and offer tons of upgrades and options. Why it is fault of GM that US public prefers oversized and overpowered cars, or clumsy SUV?

BTW, for second year in the row 20 GM executives do not get their bonuses (if that matter for anyone; Wagooner paycheck is 2.2 M and Lutz paycheck is 1.55 M). GM is turning profit for 4 quarters in the row, and future estimations are solid. GM shares gained 50% in last year, and if GM decided to concentrate on big vehicle market – all the best, it is their decision and their pain. If this decision will be mortal for GM, so be it. Chapter 11 is a good way to get rid of legacy financial obligations and UAW, and turn the company around under wiser leadership.

And that's the main reason you should get a Pruis! Protest GM and Ford's inepitude. Get a Prius or a Yaris! To heck with E85 also. Ethanol won't resolve these issues and it bumps up the price of corn and other things too.

You fools need to realize that all cars including the hybrids will be required to increase their fuel economy 4% per year. Your 40 mpg car will have to get 41.6 mpg next year, 43.3 mpg in 2009, 45 mpg in 2010 and will have to get 59.2 mpg in 2017.
That's silly. It isn't going to work that way. Why should it? To punish the guys who are not contributing to the problem?

Current GM subcompact Chevy Cobalt is:

2.2 l, 148hp, 25/34 mpg, disk/drum brakes, semi-independent rear suspension, 2991 lb vehicle with awful long-time reliability history.

Manufacture 1.8 liter VVT hydraulic and roller cam followers high-rev 160 hp engine, 32/40 mpg, disk/disk brakes, 5 speed automatic tranny, independent rear suspension, 2500 lb weight, aluminum hood & brake &calipers & wheels standard, long-lasting gaskets and AC, rust resistant exhaust, iridium spark plug and K&N air filter subcompact, backed with 7 years warranty, and witness Japanese import fold to oblivion, at least for couple of years.

Is it beyond capability?

This is complete rubbish.

Remember GM sell cars in Europe too (Opel/Vauxhall).

We had a mid-size vehicle called the Astra which was available as an ordinary gasoline version (32 mpg US), a diesel version (46 mpg US) and a economical version of the diesel, termed the ECO4 (55 mpg US).

The only changes made to the ECO4 to make it so economical were:

1) Plastic panel underneath to smooth airflow.
2) Slight changes to skirtings/spoilers (with above cut Cd from 0.30 to 0.28).
3) Lower rolling resistance tyres.
4) Longer ratio 4th and 5th gears.

The additional cost, to GM and consumer, was ZERO!

And yet it still managed to get over 75 mpg US on real roads at real traffic speeds:

http://www.sycamores.co.uk/news/july01_astra.htm

There is NOTHING to stop GM producing the ECO4 again and turning a profit on it.

Andrey - how much would your idea cost? Considering the fact that due to legacy costs GM make little to no proffit on smaller cars would that really be a good idea.
The reason euro/asian manufacturors can make profits on these cars is that they don't pay out billions in pensions and health care. Perhaps chapter 11 to get rid of these costs would help GM in the long run?

On the other hand, if Lutz thinks biofuels are the answer why arn't all GM products E85/biodiesel ready?