GM: Remapping for a More Euro-Style Vehicle Landscape

By Michelle Krebs July 15, 2008

By Michelle Krebs

The days of the U.S. being out of step with the rest of the world in terms of the vehicles Americans drive are nearing an end. next-gen Chevy Equinox.JPG    

    "We were the anomaly. We were the region with the artificially cheap fuel that created huge -- you could say unhealthy demand - for very large vehicles. But that has flipped," said Bob Lutz, General Motors' vice chairman in charge of product development, in a conference call with bloggers, including AutoObserver , Tuesday.

"As U.S. fuel costs approach fuel costs of the rest of the world, the market and the vehicle park in the U.S. will more and more come to resemble the vehicle park of every place else," said Lutz. And the shift is prompting GM, as part of a major restructuring cost-cutting and cash-generation effort unveiled Tuesday, to remap its product portfolio.

"Our future product portfolio in the U.S. is going to look more like the portfolio GM already offers in Europe, Latin America and Asia - one of passenger cars and crossovers that are much smaller and more fuel efficient than the American public has bought up to now."

So what does that new landscape look like at GM? In general, it means fewer trucks, SUVs and V8 engines and more cars, crossovers, fuel-efficient small engines and advanced propulsion systems like that of the Chevrolet Volt.

Lutz threw out a few hints on Tuesday. Here are some highlights.

Chevrolet: Cruzing But Missing A Beat - For Now

Chevrolet, along with Cadillac, are GM's global brands so not surprisingly they get the most attention, resources and new models.

Chevrolet, of course, gets the highly publicized Camaro, which GM will be showing to the media next week, and the range-extending electric Volt, due in 2010.

Lutz has high hopes for the Volt. To be built at GM's Hamtramck plant in Detroit, the Volt will be built in right- and left-hand drive and will be compliant with all regulations worldwide.

The plan in year one is for about 10,000 Volts and 60,000 in year two. "After that we'll see how demand develops," he said.

"My personal guess is if the world continues on its present course, 10 years from now we could be doing enormous quantities of essentially electric vehicles," said Lutz, who likes the E85 engine combined with the lithium-ion batteries, though GM may build an all-electric Volt as well. GM also plans other models based on the Volt's E-Flex architecture, though Lutz still won't say what models.

The Chevrolet Cruze goes on sale in Europe next year and replaces the Cobalt in 2010, although Lutz said it is sized between the Cobalt and Malibu. It is being introduced in Europe first because it will be exported from South Korea where it is made; Europe currently has no plant to produce it. In the U.S., GM is prepping the Lordstown, Ohio, plant, which now makes the Cobalt, for the Cruze.

Why must the U.S. wait a year after Europe for the Cruze?

"The Cobalt is no where near the end of its lifecycle. It's finally coming into its own as a high-volume vehicle with a rising transaction price," Lutz noted. Meantime, the Lordstown plant is expanding its capacity.
Plus, Lutz added, GM wants to launch the Cruze in the U.S. with the new 1.4-liter turbocharged engine, which is expected to help the Cruze achieve 40 mpg, 9 mpg better than the current Cobalt.

What Chevrolet won't get right away is a tiny car based on the Chevrolet Beat concept, displayed at the New York auto show a year ago. Built in Korea, the car replaces the Daewoo Matiz and is sold as the Chevrolet Spark around the globe.

Lutz said the newest version of the Beat/Spark does not meet U.S. crash and safety standards. "To render that vehicle competitive, would require substantial re-work, take about two years and would consume a lot of resources. By then it would be past its mid-cycle."

GM is studying the possibility of bringing the next-generation after that model to the U.S., either importing it from South Korea as GM does the Chevrolet Aveo or building it in the U.S.

Cadillac: A Trio of New Models in 2009

Lutz mentioned some unspecified "modifications" in Cadillac future product portfolio but insisted Cadillac will be "very, very, very" well positioned in terms of product.

next-gen Caddy SRX.JPG Cadillac will introduce a trio of new models in 2009. The CTS station wagon makes its debut in spring 2009, the CTS coupe goes on sale in summer 2009, and the new SRX crossover, based on the Provoq concept, hits the market in the second quarter of 2009.  

Caddy CTS coupe.JPG Saturn: Turn Up the Volume

Saturn, now that it has a completely revamped and complete product line, needs to crank up the volume, said Lutz, though he didn't say how that would be done. Some analysts have speculated GM might sell off or eliminate Saturn as it is believed it has never been profitable.

But it doesn't sound like it.

"We like the brand. It's a good brand, and personally I like it - I personally drive a number of vehicles, including the Aura and Sky Turbo," said Lutz, noting it is a brand that attracts a different - often import-intending - buyer than GM's other brands.

"Our worry with the Saturn franchise is it is not generating enough volume," he added.

Lutz explained the rumors that the second-generation Aura sedan, based on the Chevrolet Malibu, was being delayed. He said the original plan had been to "short cycle" the current Aura and shift it to the new global architecture used by the Opel Insignia.

But GM re-considered that plan to save money. "The Aura has barely been on the market two years and is getting stronger since we added the four-cylinder engine," Lutz said. "There's no point in short cycling it just to get it on the same track as the European model. We can save some capital by letting the current Aura have a normal product life cycle."

GMC: Focus on Crossovers

The GMC brand is another one that had been rumored to have an iffy future. After all, it sells only trucks and SUVs, except for the relatively recently introduced Acadia crossover. And virtually every model it sells is a version of a Chevrolet.

Nevertheless, GMC will soldier on. Don't look for a GMC car, Lutz said, but GMC will sell more crossovers. It will add its own version of the upcoming Chevrolet Equinox but will look very different. "The GMC sibling to the Chevy Equinox is so different you'd never guess that they are similar under the skin," Lutz said.

While some data indicates the crossover bubble may be bursting, seemingly making the GMC strategy a risky one, Lutz said the popularity of crossovers will depend on how high gas prices go and how small Americans are willing to go in terms of vehicle size.

Plus GM is planning a family of new crossovers smaller than the current GMC Acadia, Buick Enclave, Saturn Outlook and Chevrolet Traverse.

Buick: Waiting for Invicta

Critics have long suggested GM should dump Buick, especially considering its old demographics.

But the Enclave, which a year after introduction remains in limited supply, has proven to GM there's still life in the brand.

The near-term highlight for the brand will be next-year's global introduction of the midsize sedan based on the Invicta concept, unveiled at the Beijing motor show in April. It will go on sale almost simultaneously in the U.S. and China, Buick's largest market in the world.

new-age Buick.JPG Lutz predicts the Invcita-based Buick, which hasn't been named yet, will be more competitive in its segment than the Chevrolet Malibu has proven to be in its category.

Pontiac: Nourished with Product

Lutz shied away from details but insisted Pontiac is an important car brand for GM, especially now that Pontiac franchises are largely grouped with Buick and GMC stores.

Pontiac, he said, will be positioned at the low end compared with Buick and GMC but above Chevrolet with Chevrolet equivalent miles that are more expressive in styling and performance.

"Pontiac will be nourished with product," Lutz insisted. 

Powering Down

GM will continue to make V8s, mostly for trucks used by tradesmen and haulers of boats and trailers - and for the Corvette, though Lutz predicts a bit of a drop in Corvette sales volume.

Instead, the focus will be on extremely fuel efficient, flex-fuel capable, direct injection, turbocharged and non-turbocharged mostly four-cylinder engines as well as fuel-efficient V6s.

And don't expect GM to bring diesels to the U.S. Lutz sees the diesel advantage deteriorating with the higher cost of the engine itself and the high cost of diesel fuel.

The Silver Lining

Lutz sees a silver lining in the restructuring of the U.S. automotive landscape, especially for GM because it is a global automaker.

"This is a difficult transition but once the tradition is made, it's going to ease our problem of no longer having to produce unique vehicles for the American market," Lutz said. ""In the future, anything we create worldwide is available to use to either import or produce in the U.S."


1. Chevrolet Equinox will have a sleeker and more sophisticated look.

2. Next-gen Cadillac SRX won't have to try hard to improve sales performance of the current model.

3. Cadillac CTS coupe was praised as a concept car at the 2008 Detroit auto show.

4. New midsize Buick will attempt to capitalize on the styling of the Invicta concept car. 

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stevedb says: 11:17 AM, 07.16.08

Wow! 10,000 Volts then 60,000 Volts - that's quite a shock.......................

bubusdad says: 11:51 AM, 07.16.08

Is it Cruz (cross, in Spanish) or Cruze? I've read both. The version in Spanish would be problematic, given the religious connotations. Cruze, on the other hand, sounds like a hip hybrid, typical of our times. The Euro carscape better become reality soon; otherwise, Ford and GM are doomed. Chrysler doesn't even have old Talbot to rely on anymore and is stuck with a bunch of vehicles (coming from the German experience) that are stylistically and technically inferior to its previous cab-forward production and engineering.

thriftytechie says: 6:22 PM, 07.16.08

"...We can save some capital by letting the current Aura have a normal product life cycle."

This sounds an awful like "we don't have the money to launch the new Aura right now". If GM were able to attack, I think they would. Although the Insignia/Aura would likely cannibalize some Malibu sales, it would have a high probability of conquesting Camry and Accord sales too if it were sold in 2009 as a 2010 model. Instead, by pushing it back, GM's Aura becomes an also-ran as it goes up against 2012 Camry and Accord. GM should keep in mind that there is ~ a 25% chance that the 2012 Camry and/or Accord will offer those models as plug-in hybrids.

Also of concern is GM's suspension of full-size truck development. The explanation they offer is that they will be allocating resources to smaller cars. That's not a terribly great idea because although the full-size truck market will be smaller than it has been, it will still be significant and this action on the part of GM will allow the competition to catch up.
When GM allocated resources in the late 90's to full-size truck development at the expense of cars, the result was the 2003 Malibu and the 2005 Cobalt. Imagine if the next round of GM trucks slips to that sort of standard. The Tundra will then surely become the Camry of Trucks in America.

thriftytechie says: 6:00 PM, 07.18.08

It's time to push the panic button, GM.

Given that:
- It is a fact that initially curiosity and interest in the Volt will far outstrip actual sales of the car.
- When the Volt comes to market, GM will have a once-in-a-generation opportunity to brag about a truly unique automotive product.

therefore, GM should consider nixing the Chevy label and call the Volt the "GM Volt". The 1st gen product should be available for gawking, feeling, and test-driving at every Chevy, PontiacGMCBuick, Cadillac, Saturn, and Saab dealer.

This will achieve two critical objectives:
1. It will allow the Volt to be the ultimate halo car for GM, increasing traffic to ALL GM dealers. Not just Chevy dealers.
2. It will maximize sales of the hard-to-sell, easy-to-admire Volt. It's very difficult to sell $40K cars. It's near impossible to do so at a Chevy dealer. Why not maximize the sales potential of the Volt by making them available at Saab and Cadillac dealers where the customers actually DO have $20-50K burning a hole in their pockets?

The GM Volt. Think about it.


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