GM Tidbits

[sirAQUAMAN64]

Wall Street focus shifts to strength of GM results

Reuters / October 5, 2006 - 9:00 am UPDATED: 10/5/2006 3:44 P.M.
 
DETROIT (Reuters) -- After nixing a three-way alliance with Renault-Nissan, the pressure is on General Motors to post quarterly results that deliver on the promise of its go-it-alone turnaround strategy, analysts said today.

GM CEO Rick Wagoner on Wednesday, Oct. 4, called GM's progress to date this year "well ahead of what the skeptics thought possible" in explaining the reason for breaking off talks with Renault SA and Nissan Motor Co.

Wagoner's buoyant assessment of the automaker's restructuring raised expectations that GM was on track to report a significant improvement in third quarter results later this month.

"Our read is that GM management probably presented solid, preliminary third quarter results to its board ... and had built enough credibility with its board to make the case for going it alone," Bear Stearns analyst Peter Nesvold said. "In short, a solid third quarter report from GM is likely in store."

GM, which lost $10.6 billion last year, reports third-quarter results on Oct 25.

The Renault-Nissan deal had been urged by GM's biggest individual shareholder Kirk Kerkorian, who has a 9.9-percent stake in the automaker and whose personal representative Jerry York sits on the board.

But GM's board voted unanimously to walk away from the deal this week, fueling speculation that Wagoner had won York over for now with evidence of solid financial gains.

"One could take this unanimous vote as a signal that GM's board remains committed to the current management team and is likely pleased with recent profit improvements and the company's future prospects," Calyon Securities analyst Joseph Amaturo said in a note to clients.

Amaturo sees a number of positives for GM in the second half of the year, including the fact that most of its cost-savings will start to be reflected in the third and fourth quarters.

"This, coupled with reasonable production volumes and higher average transaction prices in North America, should lead to meaningful year-over-year improvements," said Amaturo, who expects GM to post an operating profit of $1.45 per share in the third quarter.

That is well beyond the average analyst estimate of 40 cents per share for the quarter, according to Reuters Estimates .

But GM has so far surpassed Wall Street estimates this year by posting operating earnings of $2.30 per share for the first half, excluding charges. That compares to a consensus expectation of just 9 cents per share for the two quarters combined.

Since January, GM has quieted critics by quickly executing most of it turnaround goals, including cutting 35,000 factory jobs and selling assets, moves Wagoner credits for helping drive a 70 percent gain in GM stock since the start of the year.

GM also surprised investors by raising its cost-cutting target by $1 billion to $6 billion by the end of 2006.

The automaker has also yet to realize big benefits from two as-yet unresolved issues surrounding former subsidiary Delphi Corp. and its finance arm, GMAC.

Wagoner said on Wednesday that he was focused on completing talks with bankrupt former parts maker Delphi and its unions. But analysts say the threat of a strike at the parts maker, once seen as a major risk to GM, is now relatively low.

GM is on track to close the sale of a majority stake in GMAC, a transaction that is expected to bring in about $11 billion to the parent company and lower the cost of GMAC's funding.

But some analysts question if GM's momentum can be sustained once steps already taken in its restructuring are fully reflected in results.

High material costs and weakening demand for large SUVs and pickups remain a risk for GM, which relies on light trucks for 60 percent of sales.

Deutsche Bank analyst Rod Lache said he remains cautious on GM. "That said, we do not anticipate seeing evidence of a negative turn at GM until mid-'07," he said.

[Snowman]

It might be hard to turn an oil tanker with a pink but once pointed in the right direction watch out.

[sirAQUAMAN64]

The Ottawa Citizen reports Bob Lutz was in Ottawa this week with Beth Lowery, GM's vice-president, environment and energy, to tour ethanol producer Iogen Corp. and talk about GM’s efforts to reduce oil consumption and produce cleaner-running vehicles (Bostelaar, C3). The Citizen provides the highlights of a number of topics Mr. Lutz addressed. Mr. Lutz said the global replacement for the Cobalt, the Chevrolet WTCC Ultra (that's a new one I haven't heard yet), won’t be built in just Korea because GM is working on the ability to build any GM vehicle of a given category in any GM plant around the world at relatively short notice. On why GM's top executives felt their efforts to streamline design, engineering and production can pay off more than a potential partnership with Renault and Nissan, Mr. Lutz said, "This is what Rick meant when he said we make nine million vehicles, which is bigger than Renault and Nissan put together. By concentrating on our in-house synergies, we can reach a lot more and do it faster than if we have to argue and negotiate with two other partners."

While he was in Ottawa, Bob Lutz discussed the progress of GM’s North American turnaround plan with the Post’s Nick Van Praet (Van Praet, FP3). Mr. Lutz on Kerkorian: GM will hire outside advisors if necessary, but product development will not be affected by a proxy battle. Mr. Lutz said it is “pride of ownership” that he kept in mind when he first came to GM in 2001 to “liberate design,” and this pride shows in models like the Saturn Aura. On vehicle quality, Mr. Lutz said GM has now easily pulled equal with the Japanese average. About Toyota, Mr. Lutz said, “We have to do a more attractive car than Toyota to be able to sell because Toyota is the default brand. People who don't know very much about cars say 'Hey don't confuse me with all this stuff. I just want a reliable car with good resale value.' And they default to Toyota.” Mr. Lutz’s closing line is,  “We have to make sure they don't go to default by giving them something so attractive that they say 'Whoa.. My default position was Toyota, but I really love this thing over here.' And I guarantee you that when you go to this season's auto shows, where we'll be showing the next generation Chevrolet Malibu, you're going to see exactly what I'm talking about."

[Scaerio]

Mr. Lutz said the global replacement for the Cobalt, the Chevrolet WTCC Ultra (that's a new one I haven't heard yet)

WTCC Ultra as unveiled at Paris Auto Show.

General Motors Europe made some great product launches at the 2006 Paris Motor Show, but perhaps none more anticipated than the spectacular Chevrolet WTCC Ultra Concept.
 
Directly derived from the World Touring Car Championship, this ready-to-drive racing car can get your adrenaline flowing and your mouth foaming just by looking at it. The PR folks say it "takes the Chevrolet design language to the extreme while embodying the brand´s spirit and race history".

It certainly is dramatic, sleek and muscular. There's a nice contrast between the sharp lines and the more flowing surfaces. The car is also exceptionally aerodynamic thanks to a raked windshield, a completed body kit, a huge rear spoiler and equally massive front air intakes.

Modern lightweight materials have been used to keep the curb weight as low and the handling as good as possible, helped by a perfectly proportioned shape -- 4325mm long, 1905mm wide and 1570mm high. Body panels are finished in "Stealth Blue" and made of a glass fiber and carbon fiber laminate. Meanwhile, the various ground effects are made of pure carbon fiber fabric. Finally, polished aluminum is used for door handles and other fittings.

Oh and in case you're wondering, the WTCC Ultra Concept is powered by a 190 hp, 2.0-liter diesel engine. As for the interior, the only word for it is "out-of-this-world".

(from auto123.com)

[MKII]

The General has agreed to pay bankrupt parts supplier Delphi’s remaining union workers an unspecified amount of money for an unspecified amount of time to avoid a planet-killing strike. Yes, it’s The Mother of All Extortion Pay-Offs– providing you don’t count that huge pile of money GM’s already agreed to pay twenty thousand not-so-dearly departed members of the United Auto Workers (UAW) who labored on behalf of Delphi. And here’s the funny part: that’s the good news.

As always, you gotta read the fine print. As part of this deal, Delphi will renegotiate or dump 5,472 unprofitable GM parts contracts. Let’s be clear: by “renegotiate” I mean Delphi got GM to lock-in the contracts the parts maker wants to keep, at a price that will earn them cash money. So there’ll be no more of that margin squeezing routine GM’s been using to torture its other parts suppliers. So Delphi can now afford to pay the base salaries of those UAW employeees that GM didn’t pay to leave, whose paychecks GM is about to top up so they don’t go on strike and kill GM. So it’s win, win, lose. The General's cash flow takes another massive hit and everyone goes back to the business of pretending the next group of vehicles down the line will pay for, well, everything.

The battle for control of GM is a yin yang thang– only there isn’t any yin. In fact, everyone who wields power in this sad saga of missed opportunity and unbridled greed is their own evil triplet; Kirk Kerkorian, Rick Wagoner and union boss Ron Gettelfinger are all as bad as each other.

The conflict between these three forces will eventually reveal the exact nature of their pernicious perfidy– at least to us. For them, it’ll be last man standing. Whoever wins will oversee a kingdom of sand, washed flat by an tide that’s been forty years in the making.

By Robert Farago

[sirAQUAMAN64]

Pretty staggering when you think about it. They do more than keep America rollin', they're keepin' em healthy too.

How GM And the Nation Are Losing an Epic Battle with Health Care - The Detroit News
By Ron French
Sept. 26, 2006

The monsters of Bruce Bradley's youth and of today sometimes mingle in his mind.

Bradley grew up in the 1950s, when seemingly every week in darkened movie houses another giant spider or fire-breathing lizard threatened the world. The Army would fire its heaviest weapons at the beast as it approached town. Then, through a cloud of smoke, the creature would emerge unharmed, and every kid in the audience knew that there was no stopping the monster.

Today, the 61-year-old wages his own war behind a set of unmarked locked doors in a Pontiac office building. There, some of General Motors Corp.'s best minds fight a losing battle against the bills for Nexium prescriptions, heart bypass surgeries and CT scans that flood in at a rate of $10,000 a minute.

Bradley gets a cup of coffee, and GM has spent $50,000 on health care. He goes to lunch, and $600,000 is gone. He takes a three-day weekend on his sailboat and returns to $43 million in medical bills.

For 12 years, Bradley, GM's director of health care policy, and the corporate soldiers in the automaker's health care war room have waged an unprecedented battle against health care costs, throwing more money, time and energy into the issue than any company in history. GM has used its size to strong-arm doctors and bully drug companies. It built the largest wellness education program in the country, convinced workers to pay more for medical care and cajoled hospitals to incorporate assembly-line efficiencies into emergency rooms.

"We've thrown everything at the monster," Bradley said.

But those efforts have barely slowed the staggering surge in medical bills that many analysts believe is a bigger threat to GM than is Toyota.

The world's largest automaker is being driven deep into financial trouble not only by the cars of a competitor, but also by the medical bills of its own workers and retirees.

Last year, GM spent $5.3 billion on health care – enough to buy a GMC Yukon for each of its U.S. employees. By 2008, General Motors will likely spend more on health care in the United States than on its hourly-worker payroll.

The economics have become so upside-down that Warren Buffett calls GM "a health and benefits company with an auto company attached."

Bradley has heard that joke before, and it always makes him squirm. He knows health care bills are crippling the company. He also is painfully aware of what that means for the rest of the country.

The profits of U.S. businesses are being eaten away by rising health care costs – a financial burden not borne by their competitors based in other countries. An estimated 46 million Americans have no health insurance at all, and those with insurance are paying more for less coverage.

Because of its aging work force and army of retirees, GM has reached a health care crisis before the rest of the country. But GM's battle with the health care beast may well be a preview of what America will be facing in coming years.

GM has staked its future on an unlikely crusade against the most expensive and sloppy medical system in the industrialized world.

The fact that in 12 years those efforts have scarcely helped prompts a frightening question:

If health care costs are driving one of the most powerful companies in the world deep into financial difficulty, how bad will the health care crisis be for the rest of us?

At his desk in the war room, Bradley can look at the data and see prescription trends and demographic projections. When he looks long enough, he can see the monster emerging from the smoke.

Every second of every day, GM pays for a medical procedure; every two seconds, it pays for a prescription. Last year it wrote checks to 500,000 doctors, 35,000 pharmacies, 5,000 hospitals, 120 HMOs and 80 insurance companies.

One out of every 87 Americans over the age of 65 has their medical bills paid by GM, as does one out of every 279 Americans of all ages.

So large is the program that someone has a GM health card in virtually every ZIP code in the United States. So costly is the program that the automaker's health care spending alone is more than the total revenue of 121 companies on the Fortune 500 list.

GM is the largest private buyer of health care in the world. Most companies pay an insurance company to assume the financial risk for health care claims. GM, on the other hand, is self-insured, meaning the cost of every mammogram and Viagra prescription comes straight out of the auto giant's pocket.

The 2005 health care tab – the most any company has paid in history – may be just the tip of the iceberg.

In a recent congressional hearing, CEO Rick Wagoner projected his company's spending would surpass $7 billion by 2009 and keep rising after that.

In a later interview with The Detroit News, Wagoner offered a grim elaboration. "Get a calculator and punch in (nearly) double-digit health care inflation for five, 10, 15 years, and you have a problem," he said. "If you keep paying more and more for health care it robs our ability to invest in future products and future technology, which impacts our ability to employ people. And it's not (a change occurring over) years; it's a faster and faster time frame."

In 1962, half the cars sold in America were made by General Motors.

Flush with money, GM offered generous health coverage and deferred benefits (retiree health benefits and pensions) instead of higher wages. That choice made sense because health care was inexpensive, and the future medical bills of retirees didn't have to be charged against revenue until they occurred.

In essence, GM was buying health care on credit.

By deferring the cost for decades, the company assumed that its market share and profitability would remain at 1960s levels or higher.

By the early 1990s, that assumption was in tatters. Its share of the U.S. auto market had dropped from 50 percent to 33 percent. Health care costs were rising at three times the rate of inflation. Facing fierce competition from Japanese automakers, GM couldn't raise its car prices to cover the increased cost of health care as it had in the past. Instead, the company turned to its suppliers, squeezing price cuts out of parts manufacturers that were struggling to pay their own health care expenses.

By 1994, the company nicknamed "Generous Motors" was suffocating under its own liberal employee benefits. That year, Harry J. Pearce, executive vice president and general counsel for GM at the time, asked James Cubbin, a longtime lawyer with the automaker, to assemble a team to put a lid on health care costs before they permanently scarred the company.

Cubbin's creation, Health Care Initiatives, set out to do nothing less than diagnose and cure the problems of the U.S. medical industry. It was an audacious plan, akin to Blue Cross Blue Shield trying to reinvent the way cars are designed, manufactured and sold.

From GM's perspective, it was a matter of survival.

"There was a tremendous amount of anxiousness among the senior leadership" about growing health care costs, Bradley recalled. "And that anxiousness has been steadily increasing."

The storm clouds hanging over GM in 1994 have become an economic hurricane. GM's market share dropped to 27 percent in 2005. Shrinking market share and the bankruptcy of Delphi played major roles in an overall loss of $10.6 billion, but Wagoner need only look at two figures to see the disastrous impact of health care costs on the company:

GM lost $8.2 billion in North America in 2005. And its health care tab amounted to nearly two-thirds of that number.

Health care costs are crippling not just GM, but also businesses across the United States, the only country where health care is primarily paid by employers. In other industrialized nations, it is paid for by the government. Companies may pay a health care tax in other nations, but that cost is far lower than the insurance premiums most U.S. companies pay.

Consider:

Since 2000, premiums for employer-sponsored family health coverage have jumped 73 percent, while wages have gone up only 15 percent, according to a Kaiser Family Foundation survey.

The average cost of annual premiums for family coverage is now $10,880 – more than the $10,712 in gross earnings a full-time minimum wage worker would make in a year.

The share of U.S. companies offering health insurance dropped 13 percent between 2000 and 2005. Citing increased costs, only 60 percent of U.S. companies now offer health insurance.

"When insurance was 2 percent of payroll, no one cared," said Richard Matthews, benefits expert for Desjardins Matthews & Tatangelo in Sterling Heights. "Now that it approaches 33 percent, everybody cares."

Employers who continue to provide health insurance pay an average of 82 percent of the cost, according to a study by the Robert Wood Johnson Foundation. With insurance premiums for a family of four now averaging almost $900 a month, companies are bearing a huge expense that their foreign competitors do not.

For example, the price tag of every vehicle GM builds in the United States includes about $1,525 just for the medical care of the nearly 1.1 million Americans the automaker insures. Toyota's health care tab for each vehicle it builds in Japan is $97; it's $400 to $425 in the United States.

DaimlerChrysler's health care cost amounts to $1,400 per vehicle; Ford, $1,100.

Those costs have to be made up somewhere. At GM, health care has diverted money and manpower from innovation at a time when the company desperately needed fresh ideas, and that played a major role in the layoffs of thousands of workers.

"If it's one year, you deal with it. If it's two years, you manage," Wagoner told The News. "But if it's a chronic $4 billion or $5 billion cost difference with your prime competitor, over time it does impact what you would like to do in things like research and development."

GM spent $8 billion last year on research and development compared to $10 billion by Toyota. The numbers seem fairly comparable, until you consider that Toyota is splitting its $10 billion over 18 vehicle models, while GM spreads its $8 billion over at least 57 models.

"Being outspent every year by $2 billion a year? Over 10 years, that's a $20 billion difference in R&D, and that's huge," said Steven Szakaly, an economist at the Center for Automotive Research in Ann Arbor. "Eventually, your technology becomes obsolete."

GM's $1.9 billion annual tab for prescription medicine alone would be enough to launch two new vehicles from drawing board to showroom. GM spends more for health care in 10 weeks than it has spent on fuel cell technology in eight years.

While GM was downsizing many vehicle-related departments to cut costs, it increased the size of Health Care Initiatives. Today, 70 people work in Pontiac, poring over medical data looking for ways to cut costs and improve the health of workers, retirees and their families.

Whether they're winning or losing the health care battle depends on your perspective. In 2005, GM spent less per person on health care ($5,000) than DaimlerChrysler ($5,444) or Ford ($6,363). If GM paid what Ford does per person for health care, it would cost the automaker an additional $1.4 billion.

On the other hand, GM's medical bills continue to spiral upward in a period when the automaker has had to cut the price of many of its vehicles.

This year, the automaker will save almost $1 billion from health care concessions made by the UAW and another $250 million from the federal government for opting out of the Medicare prescription medicine plan.

That $1.25 billion in savings will cut health care costs this year, but those savings are like "throwing a deck chair off the Queen Mary," said Sharon Baldwin, GM's health care communications manager.

Medical bills are projected to continue their rise next year.

And what is GM getting for all that money? Despite having the Cadillac of health coverage plans, GM employees don't live any longer than other U.S. blue-collar workers, according to GM data.

Americans die younger, have fewer doctors and hospital beds, and live a greater share of their lives in pain than residents of other industrialized nations, according to statistics by the Organization of Economic Cooperation and Development. In one study of quantifiable medical outcomes, the United States ranked 12 out of 13 industrialized nations.

For GM, a company whose fortunes rise and fall with the quality of its products, the health care system didn't make sense. GM – and America – was paying for a Hummer and getting a Chevette.

GM's future seemed to hinge on the problems of another industry.

"This is a national issue and needs to be addressed in that light," Wagoner told The News. "At the same time, we can't bet the company on somebody stepping up to address this in Washington. We're going after it ourselves."

If GM wanted to keep making cars, it was going to have to learn how to run hospitals. It was a frightening thought.

But the alternative was more frightening.

[Snowman]

Interesting read SAM and thanks for posting the article. Probably the single biggest reason why the US government will not let GM fail.

[Stuff]

Every time I see something like this, I look in the driveway and wonder if I should have bought the Matrix instead or civic.

[Stuff]

Interesting read SAM and thanks for posting the article. Probably the single biggest reason why the US government will not let GM fail.

I haven't followed it lately but hasn't the US government delayed talking to domestic manufacturers several times?
I was getting the impression that they were very much in this deep hole themselves and they better find their own ladder out.

[Snowman]

Interesting read SAM and thanks for posting the article. Probably the single biggest reason why the US government will not let GM fail.

I haven't followed it lately but hasn't the US government delayed talking to domestic manufacturers several times?
I was getting the impression that they were very much in this deep hole themselves and they better find their own ladder out.

Waiting for the elections to be over.

[sirAQUAMAN64]

Interesting read SAM and thanks for posting the article. Probably the single biggest reason why the US government will not let GM fail.

I haven't followed it lately but hasn't the US government delayed talking to domestic manufacturers several times?
I was getting the impression that they were very much in this deep hole themselves and they better find their own ladder out.

Yup. It's a capitalist society, don't cha know?

I don't think the current administration has a plan for if GM 'fails', but GM appears serious about doing all it can to avoid that scenario probably knowing the same.

[safristi]

PELOSI....!!!   as SPEEK_KAA....I'd rather have a FOLEY catheter!!!

[sirAQUAMAN64]

GM raises US prices on one-third of '07 models

Jamie LaReau  |   |  Automotive News / November 8, 2006 - 3:27 pm / UPDATED: 11/8/2006 4:33 P.M.
 
DETROIT -- General Motors is raising sticker prices on 35 percent of its 2007 vehicle lineup, the automaker said. The price increases range between $60 and $425 a vehicle, and took effect Monday, Nov. 6.

“What we’re trying to do in some partial way is recover our cost for some materials and commodities that we can’t control, like the price of steel,” says John McDonald, a GM spokesman. “Even with that price adjustment, we’re still offering comparable vehicles for less than our competitors.”

Most of the increases will be in the range of $90 to $140 a vehicle. GM’s launch vehicles, such as its redesigned full-sized pickups, are likely not to be affected, McDonald said.

5% boost

The price increase equals about a 0.5 percent boost, McDonald said. The highest increase is on the Cadillac XLR car, which will rise by $425. The XLR price now will start at $78,920, including shipping.

“Price increases happen all the time,” said Ed Williamson, owner of Williamson Cadillac Co. in Miami. Williamson said, though, that normally manufacturers don’t increase prices until December.

In January, GM lowered prices on most of its vehicles and then heavily advertised more value for the money. Along with that pricing strategy, GM resisted big incentive blowout sales and reduced its daily-rental fleet sales -- moves to improve the residual values of GM vehicles.

This latest price increase won’t affect dealer profit margin, Williamson said. But it might influence a customer’s purchase decision.

“Any vehicle that’s been shipped or is already in my inventory is sold at the old price,” Williamson said. “So what will happen sometimes is, when I get a few in stock at the new price, it’s possible a customer will see one at the old price. But a couple of hundred bucks more is usually not material, not on a $55,000 truck. It sorts itself out.”

GM sent Williamson a notice on Monday, Nov. 6, saying the Hummer H2 SUV will increase in price by $270. The notice indicates that the price of the Cadillac CTS sedan will rise by $165, the sticker on the SRX crossover will rise by $190, the DTS sedan’s price will grow by $220, the STS sedan will go up by $230, and all three versions of the Escalade SUV will rise, Williamson said. The two-wheel-drive Escalade increases by $280.

‘Commodity price increases’

“We’re continuing a competitive position,” McDonald said. “We’ve done a lot to control costs inside, but everyone in the industry is seeing commodity price increases, and we’re trying to recoup part of those costs.”

GM will not change the pricing on the redesigned Chevrolet Silverado and GMC Sierra pickups. The Saturn Aura sedan, Vue Green Line SUV and new Outlook crossover will not get a price increase. The base Chevrolet Aveo car, which starts at $9,995, including shipping, will remain unchanged. The Hummer H3 SUV, the Pontiac G5 coupe and all medium-duty trucks also will not get a price boost.

McDonald said that GM will list the new price increases for all vehicles affected across all eight brands on its media Web site, media.gm.com, by the end of today.

[AVToller]

Perhaps instead of increasing the MSRP they could try providing only $4300 in incentives to buy rather than $4500. 

[sirAQUAMAN64]

Gamma: GM small cars go global
Factories will spring up in low-cost countries

Alysha Webb  |   |  Automotive News / November 13, 2006 - 1:00 am

SHANGHAI -- General Motors is a global company, but so far it has had trouble creating truly global platforms that use huge volumes to cut costs.

That's starting to change.

Supplier and GM sources say GM is planning a new platform for small cars with worldwide annual volume of 1.4 million cars. The platform, called Gamma inside GM, will provide mechanicals for the next Opel Corsa and Chevrolet Aveo starting in 2009.

Final decisions have not been made, but GM and industry sources say GM is looking at producing Gamma variants in Korea, China, Thailand, India, Germany, Mexico and Venezuela. Cars also may be assembled on the Gamma platform in eastern Europe.

Gamma's global reach is a big step forward in GM's campaign to build more units using a few common platforms. In the past, GM's world-car strategy has been undermined by regional managers who demanded costly changes to their versions.

GM's full-sized pickup and SUV platform accounts for more than 1 million vehicles annually in North America.

Huge global platforms such as Gamma favor global suppliers that have factories in all major markets. The world cars also generate more work for small suppliers in low-cost countries such as China and India, where much of the production will take place.

Badges will run the gamut from Daewoo in Korea to Chevrolet in the United States and China to Opel in Europe.

"The Gamma purpose is to have a common platform which will integrate Daewoo and Opel models," says Ashvin Chotai, director of Asian automotive industry research for Global Insight in London.

Cars from the new platform will succeed cars made on two platforms now, one from Daewoo and a second developed by Opel and Fiat during their now-defunct alliance.

The current platforms account for the Daewoo Kalos, Matiz and Gentra, the Chevrolet Aveo and the Opel Corsa, Tigra and Meriva.

In the United States, a Gamma car would replace the Aveo, which is a rebadged Daewoo.

The current two platforms account for about 680,000 cars a year sold by GM in North America and Europe, about half of Gamma's planned total. Why the big increase to 1.4 million? GM is planning more sales in such fast-growing markets as China and India.

The company also is looking at more models.

Limited production is expected to start late in 2009, and higher volume is planned in 2010. The program is expected to run through 2015. Gamma cars will account for about 15 percent of GM's global sales, assuming modest growth for GM in the coming years.

Engine sizes on the models will range from 1.2 liters to 1.8 liters, with both gasoline and diesel versions.

The platform was developed at GM Daewoo Auto & Technology Co. in Korea, another sign that GM is eager to move some engineering-intensive work to low-cost Asia, away from Europe and North America.

Short version

A short version of the platform also will be built, suppliers say.

Cars from the short platform probably will be assembled in Korea, India, Poland and China.

They also will be assembled from kits in Columbia, Venezuela and Vietnam, say industry sources.

GM announced plans this year to invest $300 million in a new Indian assembly plant with a 140,000-unit capacity. That plant will start producing the short-wheelbase Gamma in 2009.

Chevrolet badges

Cars built in India will carry the Chevrolet badge and likely will be exported worldwide, Chotai says. They would replace current Korean exports.

In China, the Chevrolet Spark, an existing nameplate, will be assembled by GM's joint venture with Shanghai Automotive Industry Corp. and Wuling Automobile Co. That vehicle probably will be built on the shortened platform.

Some Chinese-built Sparks probably will be exported, says a supplier, adding: "The China volume is heavier than you would think they could sell domestically."

[sirAQUAMAN64]

Wagoner: GM plan is working
Automaker's focus is on profits, costs -- not the Toyota juggernaut

Jamie LaReau  |   |  Automotive News / November 20, 2006 - 1:00 am
 
DETROIT -- Rick Wagoner will stick to his plan.

General Motors' CEO will continue to cut costs and boost revenues. But he has no intention of taking drastic steps to goose sales, even if that means Toyota becomes the world's largest automaker, Wagoner said in an interview Friday, Nov. 17, with Automotive News.

Wagoner concedes that trends indicate that Toyota will surpass GM in global vehicle sales in the near future.

"Is it inevitable?" Wagoner said. "No. No it's not inevitable.

"Trends don't last forever. The only question is -- when do they change, and who's involved in the change? I don't think it's inevitable, but I can't argue that if you keep drawing the trend lines, your conclusion is correct."

Wagoner said GM's first priority is to get the company profitable and generate cash. That "dominates everything we think about."

One way to do that is to grow in profitable markets such as China, while cutting structural costs companywide and maintaining GM's market share in North America.

What Wagoner is unwilling to do is return to heavy incentives and fleet sales to stimulate sales. GM has successfully boosted residuals and profits per vehicle by $579 in the third quarter, compared with the year-ago period by lowering sticker prices and limiting sales to daily rental fleets.

'The right way'

"If Toyota passes us, I guess they pass us," Wagoner said. "Do I like it? No. Am I willing to take us off our plan or to sacrifice our profitability or the implementation of our marketing strategy here?

"No, I'm not willing to do that. If we're going to stay ahead, we're going to stay ahead doing it the right way and a sustainable way."

In five years, Wagoner envisions GM enjoying the benefits of its globally integrated operation with diverse products and flexible manufacturing. GM will have lower fixed costs -- his goal is to drop them to 25 percent of revenue from 35 percent -- and GM will be "more profitable." Fixed costs are the expenses that remain constant regardless of the level or production, such as rent, interest and executive salaries.

"Most importantly, we'll be a company that really is viewed as having hot products, strengthening brands and really good technology, particularly in fuel economy," Wagoner said.

GMAC, Delphi

Wagoner said GM will get two major issues off its plate soon. The first will be to close the sale of 51 percent of its captive lender, GMAC Financial Services, formerly General Motors Acceptance Corp. He is optimistic that the sale to a consortium led by Cerberus Capital Management for $14 billion will happen before year end.

"We don't have all the regulatory approvals yet, but the list has gone from really long to really short, and there are some business issues that need to be put on contract, but the progress is good," Wagoner said.

GM also must resolve its role in its largest supplier, Delphi Corp., which is seeking to emerge from bankruptcy reorganization. GM has about $4 billion in claims for the buyout of some 20,000 hourly Delphi employees. Typically, claims can be bought and sold as part of reorganization.

"It's very important that the Delphi that comes out of all this is a competitive one that can be a profitable supplier and supply us at world-class prices," he said.

Wagoner said a conclusion could be reached reasonably soon.

Wagoner said another issue GM will confront next year during UAW contract negotiations is the Jobs Bank, which pays laid-off workers.

"We'd like to reduce the cost of the Jobs Bank, yes," Wagoner said. "There are plenty of ways to do that.

"A lot of times people want to jump to the sort of extreme answer and that very well might not be acceptable to the UAW. If we've learned anything over the last decade, it's that if we sit down and work over the tough issues, most of the time we can make some progress."

[MKII]

http://www.thegmsource.com/plugins/p17_image_gallery/images/248.jpg

Chevrolet will unveil the all-new 2008 Malibu at the NAIAS in January
By Troy Halgren
Published: November 21, 2006

Chevrolet announced today that it will be unveiling the '08 Malibu this January at the NAIAS in Detroit. Not much information about the car has been released yet, except for this shot of the interior.

“The next-generation Chevrolet Malibu's interior showcases the precision and detailed execution that will differentiate it among the mid-size car segment,” said Ed Peper, Chevrolet General Manager. “The 2008 Chevy Malibu will offer a number of striking and progressive interiors that use premium materials to demonstrate quality and value not seen before in this segment.”

http://www.edmunds.com/insideline/do/GeneralFuture/articleId=116460#4

[sirAQUAMAN64]

You beat me to it with that interior shot!
http://www.autoblog.com/2006/11/21/2008-chevy-malibu-bowing-in-january-interior-pic-released/

I personally don't like the colour scheme. Perhaps others do?
I pray to god that GM doesn't lower the roof and it just looks swoopy. The current Malibu is one of the few GM mid sizers left with generous room for all occupants. Of course, no MAXX.

[airbalancer]

I like the interior colours looks rich

[sirAQUAMAN64]

http://www.detroitnews.com/apps/pbcs.dll/article?AID=/20061122/AUTO01/611220416/1148

GM kills plan for minivans

Following Ford's lead, struggling automaker will focus on crossovers.

Sharon Terlep / The Detroit News

General Motors Corp. may be bowing out of the minivan business.

Faced with a steep drop in demand for the family vehicles, GM confirmed Tuesday that it has scrapped plans to build new minivan models that would have debuted as early as 2009 under Chevrolet, Saturn and other nameplates.

While GM declined to comment on future vehicle plans, company insiders told The Detroit News that the company has no immediate plans to build minivans after it closes its last minivan-producing plant. The Doraville, Ga., plant builds the slow-selling Chevrolet Uplander and Buick Terraza minivans. It recently stopped producing the Saturn Relay.

It would mark the first time since 1985 that GM won't churn out the vehicles popularized in the 1980s by a generation of young baby boomer families.

Instead, the automaker, which has always been a small player in the minivan market compared to Honda Motor Co. and the Chrysler Group, will focus on crossover vehicles that blend the characteristics of cars and sport utility vehicles. GM is preparing to launch a group of large crossovers that include the GMC Acadia, the Saturn Outlook and the Buick Enclave.

"We do believe it is a declining segment," GM Vice Chairman Bob Lutz told The News on Tuesday. "Our new crossovers, Acadia, Outlook and Enclave with their three rows of seats and economical V-6 engines, can meet the same customer needs, minus the 'Soccer Mom' stigma.."

The Enclave hits showrooms next summer with the Acadia and Outlook on sale early next year; all three will be built in GM's new Delta Township plant near Lansing. A potential Chevrolet crossover may follow.

Lutz cautioned that GM has made no official move to pull out of the minivan market.

Ford Motor Co. did make such a decision earlier this year, abandoning minivans such as the Ford Freestar and Mercury Monterey. The Monterey is out of production and Freestar production is expected to end early next year. Ford is planning to build a new-generation family hauler based on the Ford Fairlane concept.

Minivan sales down 50%

Word of GM's change came Tuesday when United Auto Workers leaders at the plant in Spring Hill, Tenn., learned that the factory is no longer in line to build minivans next year. GM likely will find new vehicles for that plant, which has been building Saturn cars and trucks since that brand's 1991 debut, company officials said.

GM may decide down the road to build a new minivan line, though there are no immediate plans to do so.

The minivans would have been built on the same chassis design as the Enclave, Acadia and Outlook. Design concepts had been completed and some work had been sourced to suppliers.

But, in the end, GM determined its resources would be better spent elsewhere.

GM's minivan sales have fallen nearly 50 percent since 2000. In 2005, GM sold 166,000 minivans compared with 323,000 in 2000. Sales industrywide have dropped about 20 percent in that time.

GM's slice of the minivan segment was about 15 percent in 2005. Segment leader Chrysler had 37 percent of the market, followed by Toyota with 16 percent.

Auto dealers and analysts have long criticized the styling and practicality of the GM minivans, saying they were too small and unattractive to compete with Chrysler, Honda and Toyota.

"I don't think that GM ever got the minivan right," said Eric Merkle, forecasting director at IRN Inc., a consulting firm in Grand Rapids.

The early Lumina APV, made from 1990-96, "looked like a Dust Buster," Merkle said.

GM later came out with different designs, but in making those vehicles on a smaller platform designed to sell in Europe as well as the United States, those minivans were far too compact to compete here, he said.

"It's about utility and functionality with a minivan," Merkle said. "GM has been much too willing to limp along with a product that wasn't up to par."

GM restructuring under way

GM is in the midst of a restructuring plan to cut annual spending by $9 billion.

The company is looking to bring its manufacturing schedule more in line with demand for its vehicles and cutting off the minivan fits with that strategy.

The company's lineup of new crossovers is considered a key piece of GM's plan to revive its North American auto business after losing $10.6 billion last year.

"We're thinking differently about cost, and how we can knock out some big items," Troy Clarke, president of GM North America, said Tuesday during a speech in Detroit on GM's turnaround.

Clarke said the automaker has managed to pare back costs and that early sales of its new Saturn Aura sedan have been strong, with the company on track to sell 6,000 of the vehicles in November.

Down at the Spring Hill plant in Tennessee, union leaders vented frustration at the automaker's decision to cancel the minivan.

GM has no concrete plans to build a new car or truck at the factory next year, when production of the Saturn Vue sport utility vehicle moves to Mexico, according to a union memo Tuesday. GM is also discontinuing production of the Saturn Ion sedan, the other vehicle built in Spring Hill.

The plant has been somewhat of an anomaly within GM since Saturn was launched in 1990 to compete with low-cost imports like Toyota, Honda and Nissan.

"Now with only four months left before we cease production of the Ion and Vue, we still have nothing tangible to call our own," UAW Local 1853 President Mike O'Rourke said in the newsletter to members.

GM's Clarke said the company has no plans to stop using the factory and has other products that could potentially be built there.

While crossovers are promising, the minivan market is not one GM can afford to abandon, said Jim Quinlan, a Chevy dealer from Knoxville, Tenn.

GM may do well to take some time to retool their minivan concept, he said, but he hopes GM will return to the segment. "They've just missed it on the design side. But this is going to continue to be an important segment."

If it's not truck-based, I hope they have some minivan coming! Minivans are very important and big sellers to Canada, moreso than the US.

Looks like it's not a definite whether they'll abandon the segment. Likely see how Acadia/Outlook sales are - and who they're selling to - first.

GM scraps minivan for Saturn plant

Reuters / November 22, 2006 - 8:42 am
 
DETROIT -- General Motors has scrapped plans to build a minivan in its original Saturn plant in Tennessee, leaving the 16-year-old plant without a planned product and raising questions about its future.

A GM spokesman on Tuesday said the automaker's board had decided last week not to go ahead with a truck-based minivan that had been considered for production in its Spring Hill, Tenn., plant.

The Spring Hill plant, which built GM's first Saturn vehicles when the brand was launched in 1990, employs 4,700 hourly and 400 salaried workers, GM said.

The plant makes the current-generation Saturn Ion sedan and the Vue sport utility vehicle. Production of the Ion is scheduled to be discontinued in March, GM has said.

The Vue is being redesigned and its production of the new version, which GM will unveil later this month, is expected to shift to Mexico next year.

GM spokesman Dan Flores said that GM had opted not to build the proposed minivan in Spring Hill, but said that did not mean the plant would be shuttered.

"The program was canceled so that option is obviously not going to go forward anymore," he said. "But it would be wrong to assume that means the demise of Spring Hill is imminent."

United Auto Workers union president Ron Gettelfinger, who addressed union rank and file members on Tuesday via an online chat, said he saw a working future for the plant.

"Stay the course," he told a UAW member from the local that represents Spring Hill. "Product announcements are made by the corporation and we will leave that to them."

GM launched Saturn as a separate car company intended to compete head on with Japanese car makers such as Toyota Motor Corp. and Honda Motor Co.

Saturn negotiated a flexible labor contract with the UAW that allowed workers to take on a wider range of work and pioneered a no-haggle pricing strategy at its dealerships that made its first S-Series sedan a sell-out hit.

But Saturn foundered in the late 1990s, and GM disbanded the independent corporate structure behind the brand and its product development efforts.

Under GM product chief Bob Lutz, Saturn is aiming to compete with a redesigned line-up featuring European styling for customers who might otherwise buy import brands.

GM North America President Troy Clarke said on Tuesday that the automaker was on track to sell about 5,000 of its recently launched Saturn Aura sedans in November or about 60,000 units on an annual basis.

"GM needs to have a strong presence in mid-size cars once again and this is the type of design that will lead us to be known as a great car maker -- not only as a great truck manufacturer that also happens to make cars," Clarke said.