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GM Responds to Changing Market in US: New Fuel-Efficient Products, Production Funding for Volt, Shutting SUV Production, Re-assessing HUMMER

3 June 2008

Gm14
GM’s new 1.4L direct-injection turbocharged gasoline engine will have a US market variant. Click to enlarge.

GM announced a range of strategic initiatives in response to growing demand for fuel-efficient vehicles and to economic and market challenges in North America. Rick Wagoner, GM chairman and CEO, made the announcements as part of the GM annual meeting of stockholders today in Wilmington, DE.

"We are making a number of important announcements today, covering everything from product and technology investments to capacity adjustments to a strategic review of our Hummer brand. These moves are all in response to the rapid rise in oil prices and the resulting changes in the US, changes that we believe are more structural than cyclical. While some of the actions, especially the capacity reductions, are very difficult, they are necessary to adjust to changing market and economic conditions and to keep GM’s US turnaround on track and moving forward.

—Rick Wagoner

Major initiatives announced by Wagoner include:

  • A new global compact car program for Chevrolet, a next generation for the popular Chevy Aveo, and a high efficiency engine module for the US market.

  • Funding for production of the Chevy Volt extended-range electric vehicle.

  • Addition of third shifts to Lordstown and Orion, which build hot-selling Chevy and Pontiac cars.

  • Cessation of production at four plants that build pickups, SUVs and medium-duty trucks.

  • A strategic review of the Hummer brand.

From the start of our North American turnaround plan in 2005, I’ve said that our goal is not just to return GM to profitability, but to structure GM globally for sustained profitability and growth. Since the first of this year, however, US economic and market conditions have become significantly more difficult. Higher gasoline prices are changing consumer behavior, and they are significantly affecting the US auto industry sales mix.

—Rick Wagoner

In North America, GM has been moving to revitalize its car lineup and grow its crossover business. New GM cars and crossovers, including the Cadillac CTS, Chevy Malibu, Pontiac Vibe and Buick Enclave, have been selling strongly, and GM intends to build on this success. Eighteen of the next 19 new GM products for the US will be cars or crossovers.

Additional operational and strategic actions will be required to position GM for sustainable profitability and growth. These initiatives fall into three broad areas: product and technology, manufacturing facilities and capacity, and the Hummer brand.

New Chevrolet models and a high-efficiency engine module approved. To further strengthen GM’s lineup of more fuel-efficient cars, the GM board has approved a next-generation compact Chevy for the US and global markets; a next generation of the popular Chevy Aveo; and a US production module of GM’s 1.4-liter turbocharged four-cylinder engine first unveiled in Europe in May (earlier post).

The new Chevy compact will be better equipped than today’s compact cars, and will be designed to . Production of the new Chevy compact, which GM says will set quality and safety benchmarks for the compact class, will begin in mid-2010 at GM’s Lordstown, Ohio, plant, subject to final negotiations with state and local authorities.

This car will represent the first US application of our global architecture strategy. This strategy will pay major dividends as we leverage our extensive car product development capability in Europe, Korea, and other locations to accelerate the shift in our US product portfolio

—Rick Wagoner

The next-generation compact will feature the 1.4-liter turbocharged version of GM’s global four-cylinder engine. With this engine and a manual transmission, the new Chevy is expected to achieve a 9 mpg improvement over Chevy’s current entry in this segment. The engine will be produced in Flint, Michigan, again subject to final negotiations with state and local authorities.

Also recently approved was a next generation of the popular Chevy Aveo. Based on a global architecture, the Aveo is also expected to have segment-leading fuel economy when it goes on sale in the US market in the second half of 2010.

Chevy Volt is a go. The Chevy Volt took a major step toward the showroom with formal approval by the GM board of funding for production of the extended-range electric vehicle. This approval, which includes funding for production development and tooling, indicates that GM leadership believes that the technology for the Volt, including its lithium-ion batteries, will be ready for volume production on schedule.

The Chevy Volt is a go. We believe this is the biggest step yet in our industry’s move away from our historic, virtually complete reliance on petroleum to power vehicles.

We intend to show a production version of the Chevy Volt publicly in the very near future, and we remain focused on our target of getting the Volt into Chevrolet showrooms by the end of 2010.

—Rick Wagoner

Preliminary plans are to produce the Volt at GM’ Detroit-Hamtramck Assembly Center, subject to successful discussions with state and local governments.

Capacity adjustments address market shifts. GM will react to the shift in the US market by increasing production of small and midsize cars and reducing production of pickups and truck-based SUVs.

GM will add a third shift in September to the Orion Assembly Center in Michigan, which builds the strongly selling Chevy Malibu and Pontiac G6. Also in September, the company plans to add a third shift at Lordstown Car Assembly in Ohio, which builds the Chevy Cobalt and Pontiac G5.

On the other side of the mix equation, market-related declines in truck sales mean that, over time, GM will cease production at four truck plants.

Oshawa Truck Assembly in Canada, which builds the Chevy Silverado and GMC Sierra, will likely cease production in 2009, while Moraine, Ohio, which builds the Chevy TrailBlazer, GMC Envoy and Saab 9-7x, will end production at the end of the 2010 model run, or sooner, if demand dictates. Janesville, Wisconsin, will cease production of medium-duty trucks by the end of 2009, and of the Tahoe, Suburban and Yukon in 2010, or sooner, if market demand dictates. Chevrolet Kodiak medium-duty truck production will also end in Toluca, Mexico, by the end of this year.

GM expects that these actions, along with the recent announcement to remove shifts at two other US truck plants (Pontiac and Flint, Michigan), will result in an additional GM North America structural cost savings of more than $1 billion, on a running rate basis, by 2010. This is on top of the approximately $5 billion running rate reduction by 2011 announced earlier this year, and also in addition to the $9 billion reduction accomplished over the 2006-07 period in North America.

GM says that it will work closely with its union partners to mitigate the impact of these actions, which are made necessary by long-term changes in consumer demand for trucks and SUVs.

Strategic assessment for Hummer brand. Finally, GM is undertaking a strategic review of the Hummer brand to determine its fit within the GM portfolio. At this point, the company is considering all options, from a complete revamp of the product lineup to a partial or complete sale of the brand.

June 3, 2008 in Fuel Efficiency, Plug-ins, Vehicle Manufacturers | Permalink | Comments (94) | TrackBack (0)

Comments

They will be driving one of using public transportation, $4 gas now next year $5 if not more, the world is producing 85 million barrels of oil a day but demand is for 86.5 you do the math. If your smart you will get into a small car now before you can't. Aslo bike a couple of electric bikes they are great for getting to and from the local store witha few bags of items.

Posted by: | June 03, 2008 at 09:42 AM

"You can always count on Americans to do the right thing - after they've tried everything else." - Winston Churchill

thank you Raphael.
I can't believe i never heard that before.
Couldn't be more appropriate.

Posted by: danm | June 03, 2008 at 09:48 AM

GM is behind the 8 ball along with the other 2 dumbasses, they would not have gone bankrupt if they had beeen changing over to EV's and HPEV's over the past 30 years because the world would have followed are path but instead we are follwing the worlds path get it dimwit.

Given the state of technology 30 years ago, how much would it have cost GM and others to build these kinds of cars? $100K, *if* it was possible at all?

You greens are f*cking idiots.

Posted by: Matthew | June 03, 2008 at 09:53 AM

"We intend to show a production version of the Chevy Volt publicly in the very near future, and we remain focused on our target of getting the Volt into Chevrolet showrooms by the end of 2010."

Now that's what I call progress!

Posted by: Jerry | June 03, 2008 at 09:59 AM

Good moves. GM and Toyota are setting the leading example for 21st century transportation. Interestingly Japanese press reports discussions between Toyota and GM to build Prii in their US joint venture plant NUMMI. Now to get Toyota to see the light and re-evaluate their Tundra line of big trucks.

GM will produce the first mass market electric hybrid and Nissan and Mitsubishi will follow with EVs. Tiny Zenn up in Toronto claims their EEStor power unit is on track for a cityZenn 5 passenger vehicle by '08 end. While the foot dragging and retarded technology are the work of both petroleum and automotive industries - it is clear that GM at least is shedding its addiction to oil. Not easy to slow a tanker in mid-ocean.

As for the other silly propaganda that gets posted on GM stories - it's propaganda. There is and will be far greater abundance on the planet than ever before - due in part to the recognition of a need to shift energy usage to sustainable resources. That's been a good and evolutionary change brought about by a few dedicated groups and individuals, real science, and a nascent understanding of the power of good will.

I think Winnie's statement came after desperate pleas for help finally caused FDR to commit the U.S. troops that saved Britain's ass. In the end what matters is doing the right thing.

Posted by: gr | June 03, 2008 at 09:59 AM

$4 gas changes everything. And it works better than any CAFE efficiency or CARB CO2 mandate. Say goodbye to Hummer, hello to small, efficient, turbocharged engines and PHEVs. The market can change on a dime. It's good to see GM going all out to meet it.

Posted by: Cervus | June 03, 2008 at 10:03 AM

The Citroën C1 gets over 51 mpg has 5 seats and costs around $10'000 in Europe.

If an average person makes a 1000 miles per month, that's $100 at $5 per gallon. So $1500 for rent and $100 for gas?

Posted by: globi | June 03, 2008 at 10:32 AM

GM should convert those truck factories to hybrid bus plants and do a lease arrangement with cities to faciltiate sales. Their lending unit will make money, their manufacturing will make money, and cities can ramp up mass transit instead of cutting back routes due to high fuel prices.

Posted by: JMartin | June 03, 2008 at 10:34 AM

You greens are f*cking idiots.

Look at the lovely little man.

Posted by: | June 03, 2008 at 10:48 AM

Btw, didn't Japan and Germany shortly thereafter declare war against the US before the US did the same?

It seems, that Japan and Germany basically forced the US to work with Britain.

Maybe the market success of Toyota basically forced GM to take actions as well.

Posted by: globi | June 03, 2008 at 10:48 AM

Better late than never, I guess.

Posted by: ai_vin | June 03, 2008 at 11:06 AM

First and foremost the big three are companies. They exist to make money and are held by their shareholders to do so. Talk of "they should have done this a long time ago" and conspiracy theories are, imo, nonsense. The companies are following market pressure and this change is a reflection of a change in the market. If this market change happened thirty years ago, you can be assured the automakers would have changed as well. Up till now GM, etc... didn't need to bring over the diesels and other high mpg vehicles because there was no case to do so.

The same cannot be said for the Oil companies who I am sure have bought off their share of politicians.

Currently in the US there has been a large influx of organic foods and associated outlets for the same reason. The market demands it.

Change is slow and painful and not easy. However, wll of these are good changes and can only lead to even better things in the future.

Posted by: | June 03, 2008 at 11:15 AM

As I said years ago it would and did take a massive loss to enable gm to force changes the union and stats and crats dont like. Unless they get dang good bribes I dont expect gm to do much other then mothball many us plants after they shutter em for at least 20 oe 30 years.

Posted by: wintermane | June 03, 2008 at 11:16 AM

So, the unions forced GM to build hard selling gas guzzlers?

Posted by: | June 03, 2008 at 11:21 AM

globi:

Japan attacked Pearl Harbor December 7, 1941 bringing about the American entry into WW II. To say that Japan and Germany forced Americans to "work with Britain" belies a stunted politic and belittles the nearly half a million men who gave their lives to defend Europe against N*zi aggression and Japan's aggression in China and the Pacific.

Posted by: gr | June 03, 2008 at 11:26 AM

Michael,

Perhaps I was not clear. Part of the problem is that GM etc. didn't adequately prepare for the current climate.

The bigger problem is that they manipulated the public discourse in order to bury our collective heads in the sand, foreclosing much more productive options and forcing them into this last-minute "Hail Mary" approach to energy conservation.* By paying "scientists" to say conservation didn't matter, and paying politicians to cut off debate on conservation, and buying votes for "technology programs" like PNGV and hydrogen instead of sensible Pigovian taxation and similar regulation (CAFE is not optimal, but it's better than nothing), they created the mess we are in now.

A phased-in $1-$2/gal gas tax in the 1980s and 90s, even if it all went to (hopefully low- to middle-income) tax cuts, would have at least shifted our housing and transportation infrastructure toward more fuel-efficient vehicles, clustering around public transportation, and sensible private investment in alternatives. In such an environment -- not poisoned by GM anti-conservation propaganda -- the US big three would have been the ones to implement PNGV technology, as it would have made business sense, and would have led the hybrid revolution where they're following now.

As I said, they deserve everything they're getting. I just feel sorry for all of the people who will lose their jobs in the process -- and hope they have learned their lesson.

-Adam

[q->t to email]

*Apologies to the non-US-football fans, this refers to a last act of desperation in the final minute of a game when a quarterback attempts to throw an eighty-yard touchdown pass -- and inevitably fails.

Posted by: Adam | June 03, 2008 at 11:27 AM

The relatively temporary energy problem that the developed World's nations have endured since 1973, some 35 years with another 10-15 to go, has been solved.

Just because you don't have the perspective to see the crank now set in motion, and turning until completion, does not mean that the cure hasn't happened, already. Sometimes, it simply takes time to fully come to pass and work out.

Once again we have a "deus ex machina", from Man's Darwinian advantage, his brainpower, and the conversion to electric vehicle designs by ALL the world's automakers has irreversibly begun.

Liquid fossil fuel viabilty, as a THE prime energy source, is already marked for extinction. It will take another decade or slightly more, but the days are numbered for the Oil Sheiks and Oil Commissars.

Transport will gradually go electric, we all know it. That is the LAST market for oil that is not yet in outright decline.

HVAC, and chemical feedstocks have long since found adequate substitutes, and both markets steadily see a declining residual demand. Oil electric generation has long disappeared in the intervening years since '73. Thi=ose three mearkets and TRansport were the demnd for oil in 1973. Three markets are gone and the last great market is teetering.

There are lots of sources for electricity, take your pick. We'll build them all, now that the green ignorants are fractured, and mobilized mob chants, no longer overule logic or real alternatives.

Clean air and water, is continuing to advance, and we are not far from declaring Victory, at least in the US, and maybe a decade and half later in Europe, and a few decades subsequent to that, worldwide.

Clean Coal is technologically here; even CCS is proven and available, if needed. (But its probably not needed). With simply the increased thermal efficiency, of clean coal, waste output like CO2, will decline 20-25%, even without CCS.

CO2 will fall out of the atmosphere naturally, over the next few decades as CO2 additions decline in Volume. We may even discover that the trace increases in atmospheric CO2 were not only or exclusively anthropormorphic in origin, but simply natural Ocean outgassing, as the World has recovered from the Little Ice Age, under the stimulus of increased Solar output.

All the hot air, political speeches, mass mob mobilizations, and exhortation for everybody else to change and conserve, while putting them in charge, have once again revealed to produce exactly... nothing.

The self-appointed, Messiahs with their feet of genuine clay, have obstructed and impaired the solution, even as it provided power and sinecures for them. They will have to dream up some new hoax to continue their position.

In the final analysis, they might even consider actually producing something useful. Egads! Wash my mouth out with soap. W-O-R-K, Work, is the last thing these ciphers would EVER consider.

Posted by: stas peterson | June 03, 2008 at 11:31 AM

gr,

And Germany declared war against the US on December 11th 1941 before the US did the same.

So what alternative options did the US have other than declaring war against Japan and Germany? Any ideas?


Posted by: globi | June 03, 2008 at 11:36 AM

Well which is it? mobilized mob chants or mass mob mobilizations?

Posted by: | June 03, 2008 at 11:37 AM

All transport electrically powered?

Does Boeing already have electrically powered passenger aircrafts in the pipeline?

What ships - having to deliver a return on investment - are currently not oil powered?

Posted by: | June 03, 2008 at 11:47 AM

All I have to say is that GM is moving too little and too late.

Posted by: Rich | June 03, 2008 at 11:57 AM

Although these news are good, the price of the Volt is a major point. At $40,000 price point, it would be limited to rich green drivers.

A more limited offering at $25,000 would have wider appeal.

Posted by: Lulu | June 03, 2008 at 12:06 PM

GM is behind the 8 ball along with the other 2 dumbasses, they would not have gone bankrupt if they had beeen changing over to EV's and HPEV's over the past 30 years because the world would have followed are path but instead we are follwing the worlds path get it dimwit.

Given the state of technology 30 years ago, how much would it have cost GM and others to build these kinds of cars? $100K, *if* it was possible at all?

You greens are f*cking idiots.


Im not a greenie dimwit , we need to change over to and electric economy because we don;t have a millions of years to wait for more oil to be made in the earth dimwit, like I said the world produces 85mb of oil a day but we are consuming 86.5 and this is why oil prices are going up plain and simple and they knew this was comming.
If they had kept to the cafe standards after the 70's oil crisis then the auto industry would have been slowly raising mpg until they could no longer increase the ice and then started moving over to EVs in the early 90's and today we would have had a EV car fleet and ice would be just about dying out dimwit.
Have fun paying $10 a gallon in a few years if not sooner btw what do you think that will do to the world economy ? yeah thats right world depression dimwit, so it looks like they will be bankrupt after all your dimwit.
Has nothing to do with being green has to do with a finite engery source you dimwit.

Posted by: | June 03, 2008 at 12:17 PM

Oh gee... Progress means my gloom agenda has no home! I can't blame it on CO2 anymore (too many truth sayers) can't claim the great flood is coming (too religious anyway), can't say it all man's damned fault no matter what - cause nobody believes me anymore! Did I just blow my opportunity on the big stage??

In the end truth always outs. DAmn!

Posted by: gloomerNU | June 03, 2008 at 12:17 PM

thanks for the insight matthew

while boeing may not have an electric plane in development(and probably never will) they are looking at getting biodeisel into their aircraft, which is about the best we can hope for, and if done in a sustainable way is just perfect.

Posted by: Brad Godfrey | June 03, 2008 at 12:18 PM

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