G.M. Hopes a Line of Pickups Will Lead Back to Prosperity August 3, 2006
G.M. said its 2007 Chevrolet Silverado and GMC Sierra trucks would begin arriving at dealerships in October, 13 weeks ahead of schedule.
MILFORD, Mich., Aug. 2 ? Even as surging gasoline prices deflate sales of trucks and sport utility vehicles, General Motors is rushing a new line of full-size pickups to showrooms in the hopes of strengthening its turnaround effort.
G.M. introduced its 2007 Chevrolet Silverado and GMC Sierra at its testing facility here on Wednesday and said the trucks would begin arriving at dealerships in October, 13 weeks ahead of the original schedule.
G.M.?s chief executive, Rick Wagoner, called the new trucks ?the most important part of our North American turnaround plan.?
G.M.?s largest rival in the truck category, the Ford Motor Company, responded Wednesday by saying that it would reduce sticker prices for its 2007 F-Series pickups by as much as $1,400, offer two additional body styles and increase towing capacity. G.M. has not announced prices for the new Silverado and Sierra.
Both companies are desperate to increase sales of pickups, which are among their most profitable products. Detroit?s automakers earned $11,449, excluding incentives or other dealer payments, on each pickup they sold in the first half of the year, according to an estimate by CNW Research, while barely breaking even on many passenger cars.
But pickups have become a much tougher sell than in 1999, when the Silverado and Sierra were last redesigned. As gasoline prices have climbed past $3 a gallon, sales of large pickups have fallen 36 percent in the past year.
In addition, the Japanese rivals Toyota, Honda and Nissan have been rolling out new pickups and gaining market share in that segment, which has long been dominated by American carmakers.
Despite higher fuel costs, Robert A. Lutz, G.M.?s vice chairman and chief of product development, remains confident that well-designed pickups can lead the company back to prosperity.
?The effect will decrease over time as people adjust to the thought of $3 a gallon, just as they did when it was $2 a gallon and just as they did when it was $1 a gallon,? Mr. Lutz told reporters.
But James P. Womack, founder of the Lean Enterprise Institute, a research organization, said he believed rising fuel prices would have a more lasting effect on the industry.
?Why do you think it?s going to stop at $3 a gallon? Are we going to go back to $20-a-barrel oil?? Mr. Womack said.
?He?s got to be holding the crowd back and saying, ?It?s not a fire, it?s just a little bit of smoke, folks.? It just seems to me a lot of things are happening now. It?s a very precarious time for everyone in this game,? Mr. Womack added.
Mr. Lutz also said the redesigned trucks would let G.M. tap into a large base of consumers who insist on driving pickups.
The majority of those who buy pickups have no practical alternative because of their work needs or lifestyle, said Jesse Toprak, executive director of industry analysis for Edmunds.com, a Web site offering advice on buying cars. Rather than comparing a Silverado to a smaller, more fuel-efficient vehicle, these consumers only compare one pickup to another, he said.
?It is not the best timing, but I think that G.M. needed this,? Mr. Toprak said. ?The new trucks will bring a lot of attention and floor traffic to their dealers.?
G.M. designed the new trucks to appeal more to buyers who regard fuel efficiency as a priority. In highway driving, the two-wheel drive versions will get at least three miles per gallon more than competing models, the company said, while four-wheel drive versions will get two miles per gallon more than rival models.
G.M. claims they are the first pickups to achieve more than 20 miles per gallon with engines that produce at least 300 horsepower.
The redesigned Silverado could overtake the Ford F-Series as the nation?s top-selling vehicle. The F-Series outsold the Silverado by just 2,400 in July, compared with a gap of 31,000 a year ago, and demand usually swells when new models are introduced.
That would end more than two decades of supremacy for the F-Series and bolster G.M.?s image as it recovers from a loss of $10.6 billion last year. It would also come as some analysts have lost patience with the progress of the reorganization effort at Ford, which last week posted a $123 million second-quarter loss and is expected to stay in the red for the third quarter.
?If nothing else, I think it would be a psychological blow to Ford,? Mr. Toprak said.
However, G.M. executives publicly dismiss any suggestion that they are concerned with stealing the top-selling model distinction from Ford. Mr. Lutz noted that the combined sales of the Silverado and the nearly identical Sierra already overshadow the F-Series sales numbers.
- Posted in : GM,Uncategorized
- Author : arnold
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