Henderson: Gm Must Make Money From Cars, Crossovers

[fbachman]

Jamie LaReau

Automotive News

June 3, 2008 - 11:54 am ET

 

 

 

DETROIT -- General Motors must restructure its business model in the United States to cut costs and build cars and crossovers that command high transaction prices, COO Fritz Henderson says.

 

GM today announced four plant closings and the possible sale of the Hummer brand as it reacts to high gasoline prices and a deep decline in consumer demand for full-sized pickup trucks and SUVs.

 

Consumers want fuel-efficient vehicles, and if those are winners, consumers will pay for them, Henderson said in a conference call with analysts and reporters. Meanwhile, GM is watching demand wither for traditionally high-margin vehicles, such as full-sized pickups and SUVs.

 

"These are our most profitable vehicles, particularly the full-sized utes," Henderson said. "We need to be able to produce more profitability from our passenger cars because we'll be under pressure in terms of revenue."

 

GM is getting better transaction prices on vehicles such as the Chevrolet Malibu and Cadillac CTS sedans as well as its popular crossovers -- the GMC Acadia, Buick Enclave and Saturn Outlook -- than it has traditionally, he said.

 

"It helps when you get it right," Henderson said.

 

Henderson's answer to how GM will tweak its vehicle lineup is "stay tuned."

 

"What we need to assess and what we are assessing is what's our B plan going forward in terms of product," he said.

 

If the consumer does return to trucks, Henderson said, GM can easily add shifts at its remaining truck plants to boost production.

 

GM does have a two-mode hybrid variant of the Chevrolet Tahoe and GMC Yukon SUVs it launched this year. When asked whether GM would increase production of the hybrid variant, Henderson stopped short of outlining GM's plans.

 

"We have a lot of options going forward," Henderson said. "We will have more hybrids in those technologies and other applications, but at this point we have nothing to announce."

[asilverblazer]

"It helps when you get it right," Henderson said.

 

Henderson's answer to how GM will tweak its vehicle lineup is "stay tuned."

 

"What we need to assess and what we are assessing is what's our B plan going forward in terms of product," he said.

 

If the consumer does return to trucks, Henderson said, GM can easily add shifts at its remaining truck plants to boost production.

 

Almost sounds like GM was caught with their pants down. All the other talk is trying to convnice other wise...

[Guest Riggs]

im sure gm could tell what it could do, but what if gas prices go down....then people want trucks again.. and if they go up then they want more cars.... if they stay like it is they will sell more SUVs

[BigJayDogg3]

im sure gm could tell what it could do, but what if gas prices go down....then people want trucks again.. and if they go up then they want more cars.... if they stay like it is they will sell more SUVs

 

 

Maybe I'm misunderstanding what you are saying. SUV sales are already declining, and will continue to do so until gas prices go down. GM could either up car production, and try to still make some money, or they can keep producing large vehicles, and lose money. Your theory doesn't make much sense. Sure gas prices will eventually go down, but what are they going to do in the mean time? Fill up dealership lots with vehicles nobody wants?

[Rocco715]

Hopefully GM won't get rid of Hummer, At least set it on the back burner for a while before any rash decisions are made. But this is common sense, yes they need to focus on the cars and vehicles that sip gas when no one is wanting a V8

[fbachman]

The part I don't understand (to be fair, I DO see a slight tilt in that direction):

 

Opel in Europe has seen a recent resurgence and offers EXCELLENT small, fuel efficient vehicles. They receive rave reviews in Europe where, admittedly, the taste in cars is somewhat different than the American marketplace, but if the answer is "we gotta start marketing/selling fuel efficient cars QUICK", they HAVE the answer, and all they need, already. Incidentally, that was the headline of the posted article above.

 

I don't mean "borrow" a few body panels and "americanize" the car, I mean build it "as sold" in Europe, with necessary DOT mods and RUN with it....Even american auto mags that test these cars in Europe give rave reviews and ask the same question...

 

German Auto mags question the decisions coming out of Detroit ref its own American internal market, and question why there appears to be little mining of the European knowledgebase. Could it be coporate arrogance?

 

Desperate tiems call for desperate measures.

 

I still feel the answer for large pickups in the near term are reasonably sized, boosted, diesels. I am CERTAIN that with European input, the Sierra GMT900 could be outfitted with a great 3-4 liter V8 diesel, turbocharged, along with a good 6-speed trannie, that would provide low end torque we like, good power and speed, AND get on the order of 20-25mpg city and high 20s low 30s on the highway. That's comparable to most mid-sized sedans.

 

I dunno, this would make sense to me. Boost the small car market with Opel, salvage what you can in the truck SUV segment with the diesel approach above, and maybe it's a win-win.

 

Just my $0.05...