GM Delays Nearly All New Product Development for 2009 and 2010
Automotive News reported this morning that multiple sources familiar with GM’s product plans have said that in order to conserve cash at the struggling auto giant, nearly all new product development activities slated for 2009 and 2010 have been postponed. The only exceptions are vehicles that are seen as critical to the company’s image (the Chevrolet Volt and Camaro) and products whose development work is basically complete already (the Buick LaCrosse and Cadillac CTS wagon, most likely), the latter because very little cost savings would be realized this late in the game since the development work is basically complete on those vehicles.
GM expects that the moves will save up to $1.5 billion per year with the product delays as the company fights to stave off bankruptcy until the US new car market stabilizes and returns to normal (you know, when a 15% monthly sales decline is seen as a bad thing again instead of a good thing).
This situation is a perfect example of why GM should have done a better job of keeping its mouth shut regarding future product plans, specifically in regard to three Chevrolet products: the aforementioned Camaro and Volt, plus the Cruze. We’ve now seen and heard about both the Camaro and Volt for years (the Camaro since January 2006 and the Volt since January 2007) and GM has kept the public completely in the loop with regard to the development of these two products, even to the point of testing Camaro mules without any camouflage and showing the “production Volt” at a September 2008 press conference more than TWO YEARS before the car’s targeted on-sale date of late 2010.
Meanwhile, GM showed its upcoming 2011 Chevrolet Cruze global compact car to the world in official exterior photos a few months ago, and the car made its auto show debut in Paris a few weeks ago. Of the three future Chevrolet products we’re discussing here, the Cruze is probably the most significant to GM as it 1) will sell in higher volumes than the Camaro and Volt combined, 2) if its 1.4 liter direct injection turbocharged four cylinder can deliver the promised 40+ mpg fuel economy, it will help GM’s CAFE numbers, and 3) the car that it will eventually replace, the Cobalt, is a relic from the “old GM,” the era of cheap interiors and engineering to a cost point rather than to excellence. The Cruze is now likely delayed for 6 to 12 months, which could make the car a 2012 model, which means the Cobalt will be a 7 year old model with no significant updates by the end of its lifecycle. Did I mention that small, efficient, stylish cars are what most consumers want right now, and GM will continue to trot out the Cobalt, which looks basically like a 1997 Cavalier that has overly large headlights, as its offering in the segment?
Had GM not spent the money and time hyping the Camaro and Volt so incessantly, and promising that the Volt would be on sale by the end of 2010 (and therefore devoting resources toward this halo car pet project that will not sell in large numbers, even if demand is there at its anticipated high price), it could have concentrated on making the Cobalt more competitive, or better yet, getting its replacement to market sooner than the middle of the next decade.
I thought that our own J.S. Smith was a bit harsh with his “Is Anyone Dumber Than a GM Executive” editorial a few months ago, but as this company lurches toward bankruptcy – or selling off most of the company, while sacrificing future products, which are the lifeblood of the company’s future sales – I’m beginning to wonder if Mr. Smith might have been onto something.