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GM Announces New Products, Capacity Adjustments; Continues Transformation of North American Business

June 06, 2008

WILMINGTON, DE – GM has announced a range of strategic initiatives to aggressively respond 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.

Major initiatives 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 U.S. 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," said Wagoner. "Since the first of this year, however, U.S. economic and market conditions have become significantly more difficult. Higher gasoline prices are changing consumer behavior, and they are significantly affecting the U.S. auto industry sales mix."

In North America, GM has been moving rapidly and successfully 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. In fact, 18 of the next 19 new GM products for the U.S. will be cars or crossovers.

To further strengthen GM's lineup of fuel-efficient cars, the GM board has approved a next-generation compact Chevy for the U.S. and global markets, a next generation of the popular Chevy Aveo, and a U.S. production module of GM's 1.4L turbocharged four-cylinder engine.

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

The next-generation compact will be pure Chevrolet in design, and will feature the 1.4L turbocharged version of GM's global four-cylinder engine. With this engine and a manual transmission, the new Chevy is expected to achieve a nine-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 U.S. market in the second half of 2010.

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.

"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," Wagoner said.

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

Also, GM will react to the shift in the U.S. market by increasing production of small and mid-size 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 hot-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, Wis., 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 U.S. 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 that we announced earlier this year, and also in addition to the $9 billion reduction accomplished over the 2006-07 period in North America.

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.


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