GM Delays Truck Overhaul
The Detroit News
By Sharon Terlep
June 19, 2008
General Motors Corp. has indefinitely put off plans to re-engineer a next generation of full-size pickups and SUVs amid plummeting sales of large trucks, the automaker said Wednesday.
Instead of overhauling big trucks like the Chevrolet Silverado pickup and GMC Yukon SUV in a few years, GM will save money and resources by improving on the current models launched in 2007. Delaying a remodel of the trucks also gives GM time to factor in the effects of new federal fuel economy mandates.
GM could save $250 million to $300 million by putting off that makeover for just one year, said analyst Jim Hall of 2953 Analytics LLP in Birmingham.
The next generation of full-size trucks was scheduled to go into production in 2013, according to GM's labor contract with the United Auto Workers.
"We're going to focus on improving the current trucks until we see where the market goes," GM spokesman Tom Wilkinson said.
Sales of GM's full-size pickups were down 24 percent last month compared with a year ago as consumers grappled with the reality of $4-per-gallon gasoline. Large SUV sales fell 51 percent for the same time period.
Industrywide, passenger cars outsold light trucks in the United States this spring for the first time in two decades, a trend that's expected to stick around if not accelerate.
In response to the dramatic shift, GM last month announced plans to idle four North American truck factories as part of sweeping restructuring moves designed to move away from a traditionally truck-heavy portfolio. The automaker also is adding shifts at two car plants.
The move to delay a major truck redesign likely frees up money and engineering talent that cash-strapped GM can spend to develop more fuel-efficient vehicles such as cars and crossovers. A total redesign typically takes four years.
GM has said it needs more and better passenger cars for the U.S. market. But money to develop new vehicles is tight. The automaker, which hasn't turned a full-year profit since 2004, is burning cash, losing $3.3 billion in this year's first quarter alone.
Full-size trucks, because they come in so many configurations, are typically the most costly and complex vehicles to redesign.
Hall said the automaker could use its resources to build vehicles that are in greater demand increasingly by fuel-conscious consumers. GM is looking at everything from battery powered cars to high-tech gasoline engines to deliver more miles per gallon.
"By delaying, you're making more people available and now to these people will be working on more strategic programs," he said.
GM, he said, also likely wants to hold off on new trucks until next spring when requirements of new corporate average fuel economy, or CAFE, mandates are finalized.
"This is being done to better use their resources in this time between now and CAFE," Hall said.
GM faces stiff competition in the shrinking pickup segment. Ford Motor Co. and Chrysler LLC plan to launch new versions of the Ford F-150 and Dodge Ram pickups this year.
GM's Wilkinson said the automaker is confident that the existing trucks can compete with other companies' new models. Even without a total makeover of the platform, GM can change anything from the trucks' powertrains to the interiors.
"Our intention is to remain a leader in the segment," Wilkinson said.
Now,..what REALLY irritates the hell out of me with all of this BS?!...the TOP 5 Execs just split $40 mill in "bonuses"...WTF?!:angry:
(Side note: IF the new Ford F-150 and Ram's don't sell....they'll never re-coup the costs invested in their re-designs.....bad timing now to debut new guzzlers!) GM may actually be doing the right thing by delaying our new full size trucks....the downturn in market share and sales
:angry: I just got my 25 years in this joint (salaried) and I'm STILL NOT sure I'll see 30yrs!! This SUUUCKS!!:angry:
