GM Responds to Changing Market in US: New Fuel-Efficient Products, Production Funding for Volt, Shutting SUV Production, Re-assessing HUMMER
03 June 2008
|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.
Watch for GM to very seriously look at essentially building their Opel/Vauxhall line of models here in the USA. Not only will we get the Astra (already here) and the Corsa (coming probably late 2009), but also the Meriva and Zafira "multi activity vehicles," too.
Posted by: Raymond | 03 June 2008 at 07:12 AM
The greatest thing is to see the Volt get the green light.
All in all good news out of one of the biggest carmakers in the world. But I am curious to see the upcoming comments from the GM bashers.
Posted by: Mark A | 03 June 2008 at 07:37 AM
"...the 1.4 liter DI turbo engine provides a 9mpg improvement over Chevy's current entry in this segment."
Really!?! What is the "next-generation compact" replacing? Is it the 23mpg avg rated 1.6liter 5spd Aveo or the 24mpg avg rated 2.2liter 5spd Cobalt?
Either way, a 9mpg (avg?)improvement is nothing to sneeze at. GM, I'd buy an inexpensive 32-33mpg avg rated Cobalt-sized vehicle.
GM seems to be taking steps in the right direction (finally)!
Posted by: DieselHybrid | 03 June 2008 at 07:45 AM
GM needs 10x Volt (various size and type) vehicles quickly if they want to compete in the next few years.
It is time to drop (most or all) large ICE vehicles.
Whoever comes first with good PHEVs and BEVs mass production will take the lead for many years.
Will GM, Ford and Chrysler be quick enough?
Posted by: Harvey D | 03 June 2008 at 07:47 AM
"You can always count on Americans to do the right thing - after they've tried everything else." - Winston Churchill
Posted by: Rafael Seidl | 03 June 2008 at 07:47 AM
It is refreshing to see initiative at one American auto company. GM, IMO, will survive. Ford and Chrysler have more uncertain futures.
Posted by: GreenPlease | 03 June 2008 at 08:05 AM
re: "You can always count on Americans to do the right thing - after they've tried everything else." - Winston Churchill
great! anyway, when they start, Americans tend to be very quick.
Posted by: Bruno Cipolla | 03 June 2008 at 08:12 AM
They all better hurry up. Nissan/Renault boss was in north-east England today - reported thus in local press
"...The future is also looking bright with Nissan announcing last month that it wants to become the world leader in electricpowered vehicles over the next five years. ..The company said it would introduce a zero-emission vehicle in the US and Japan in 2010, and mass-market vehicles around the world in 2012 - making it the first manufacturer to commit to plans to mass-market all-electric vehicles worldwide. ..A spokesman for the company said it was too early to say whether the electric vehicles would be made at the Washington plant..."
Posted by: Stan Wellaway | 03 June 2008 at 08:16 AM
PS: That's Washington, UK by the way (same town where Smith Electric Vehicles are based) not Washington USA.
Posted by: Stan Wellaway | 03 June 2008 at 08:19 AM
Raf, thanks for the good laugh. I had forgotten that quote, Winnie had a boatload of good ones.......
Posted by: Bud Johns | 03 June 2008 at 08:20 AM
If they were smart they would change those truch and suv plants into PHEV an EV plants like now while they still have a chance.
Posted by: | 03 June 2008 at 08:31 AM
~> “Oshawa Truck Assembly in Canada, which builds the Chevy Silverado and GMC Sierra, will likely cease production in 2009”
I presume that GM will pressure the Canadian Government to fork over huge subsidies to convert the plant to another useless planet destroying product. Every time I dig into why great new technology failed to help our fuel economy, I find GM bought and squashed it. We should have learned about GM when they bough up the Electric Trams in each city and removed them. Stinky GM buses have made city life less pleasant for years.
I for one will be pressuring the Canadians to link up with Toyota or give the plant to the Canadian company Zenn instead. Electric Cars are the future.
Posted by: John Taylor | 03 June 2008 at 08:34 AM
Will GM seriously consider a Chery offer for Hummer brand? It is a better fit in China where infatuation with excess continues unabated.
Posted by: | 03 June 2008 at 08:40 AM
The biggest mistake GM ever made was to kill the EV1, unless OPEC and the world Big OIL companies are hiding about 1 trillion barrels of light sweet crude the world over the next 25 years is going to be a ugly and pain filled place for the worlds poor (stravation and die off) and the middle classes will become the new worlds poor the rich will be the new middle class and the elites will stay the same.
the poor in America won;t be able to drive a car anymore they will take public transporation and middle class will drive short range EV's to beable to live a simple live , the rich will drive PHEVs and the elites will be able to do whatevet they want as they always have and there will be even more poor people for them to use.
Posted by: | 03 June 2008 at 08:42 AM
That quote was right on Rafael. Who knows, maybe the next president will save the money on the Iraqi black hole and invest it in technology that will solve both problems of energy dependence and global warming. After all you can achieve a great deal with $200 billion a year.
Posted by: Henrik | 03 June 2008 at 08:51 AM
9 MPG improvement over current production for a sub compact model is bullshit given the poor mileage of their current production. Can they announce a car with better than 40MPG average like the Prius or the honda civic hybrid ? No so they should do their homework
Toyota will release the new Prius later this year with 50-55 MPG average, honda will release 3 hybrid models next years with better than 45/50 MPG.
Better than 45MPG average ,that's what people need to keep their mobility in this country, the rest is just bullshit.
Posted by: Treehugger | 03 June 2008 at 08:54 AM
I am really glad to see movement on the Volt. An all electric vehicle simply would not work for me. I have SRP so dirty electricity is not an issue. I have a house with a garage and a M-F 45 mile total commute and a middle to uppermiddle class income. I know I sound perfect for an all electric. But I know something about myself. Even though I have both wall chargers and car chargers for my cell phone, norelco and Ipod. I still manage to have dead batteries a couple times a month. The Volt sounds perfect because it will compensate for my occasional forgetfulness.
Posted by: Joseph | 03 June 2008 at 09:09 AM
Finally, in response to spiralling oil prices they can't control and with no end in sight, a major US automaker decides to change its tune.
Perhaps if they had listened to the chorus of scientists, policymakers and others screaming at them to do this for the past THIRTY YEARS, instead of plugging their ears and paying politicians and pseudo-scientists to plug those of the public, I might have sympathy on them -- and maybe even a bit of admiration.
As it is, they're desperate to stay alive, and maybe even relevant, and doing the only thing they possibly can. Hardly a company/industry I can admire. Yes, it's good news, but that it had to take this is really a shame.
[q->t to email]
Posted by: Adam | 03 June 2008 at 09:13 AM
To all the people who think that peak oil is nothing more than another stupid, baseless obsession of the Internetters, let me point out that GM wouldn't take expensive actions like the ones outlined in this article unless they're highly confident that gasoline won't be cheaper under any foreseeable scenario.
Also, remember when Mullaly of Ford talked recently about their internal projections showing US gasoline to be in the range of $3.75 to $4.25 until the end of 2009? How often do large companies talk about their internal assessments like that? Would Ford do it if they thought they were telling all the other car companies something they don't already know?
Forget all the posturing and follow the money. And the money is suddenly pointing to much more expensive oil and gasoline.
Posted by: Lou Grinzo | 03 June 2008 at 09:18 AM
Henrik, sorry but I don't think the next president will have the balls to get out of iraq, I hope, but I don't think they will. Besides the states is running such a huge deficit that saving $200 billion will only start to ease off that. It won't open up for new spending.
Treehugger, the prius is a hybrid, not a subcompact, it's unfair to compare the two. A lot of people can't afford a hybrid, so they go for subcompacts. It's better to compare it to a yaris sitting at 41mpg. And another thing, the volt will do WAY better than the prius ever did for gas milage. Most people won't use gas if they just plug in overnight except for if they want to go on a long trip. So they are in fact offering something better than the "green" toyota is. Now we have to wait for toyota to step up to the plate. The Prius will no longer hold them up. The volt will rightfully take it's place.
Posted by: Brad Godfrey | 03 June 2008 at 09:20 AM
Perhaps if they had listened to the chorus of scientists, policymakers and others screaming at them to do this for the past THIRTY YEARS [...]
They'd be bankrupt. What would *that* have achieved?
Posted by: | 03 June 2008 at 09:25 AM
Sorry, that was me. As if you couldn't have guessed.
Posted by: Matthew | 03 June 2008 at 09:25 AM
Good for GM but I'm still waiting for them to develop a line of motorcycles. BMW, Honda, and Suzuki do it.
Posted by: Jenkins | 03 June 2008 at 09:28 AM
Correct me if I'm wrong, but there isn't a single person the whole of the US that will buy a car with a 1.4 litre engine, even if its turbocharged and has more hp than the 3.0 V6 it replaces. For example the turbo 1.6 (190hp) in the Astra, Corsa, Meriva etc. for the 3.5 V6 (200hp) in the Uplander et. al.
Hence why VW continue with the age old 2.5 150hp lump and not introduce the lighter 1.4TSI 170hp in N.America.
Even Toyota (Scion) were shocked at the ignorance and dumped the oversized 2.4 in everything that had previously carried the more efficient 1.5
Am I wrong...?
Posted by: Mickster | 03 June 2008 at 09:36 AM
The volt will be selling in the low $40 thousand range I don;t think it wil be out selling the prius anytime soon, also the prius will be plug-in 09 plus they can make and all electric prius at the sametime, 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.
Posted by: | 03 June 2008 at 09:37 AM