GM shows off fuel-efficient SUV
FIRST TO AVERAGE 20 MPG
SOUTHFIELD, MICH. • General Motors Corp., the world’s largest automaker, will be the first company to average at least 20 miles per gallon in fuel efficiency with a large sport-utility vehicle, GM’s top truck executive said yesterday.
The 2007 Chevrolet Tahoe, one of several new large SUV models from GM scheduled to go on sale early next year, will use a more aerodynamic shape and redesigned engines to cut fuel consumption, Gary White, vice-president of GM’s North American truck operations, said in an interview. GM introduced the model yesterday.
The Tahoe is the best-selling large SUV in the United States. GM is counting on it and other vehicles in the line — such as the Chevrolet Suburban, GMC Yukon and Cadillac Escalade — to help improve profits next year after three straight quarterly losses, including a net loss of US$1.4-billion in the first half of this year.
“ These are a key part of GM’s turnaround because that’s where the profit has been, and GM has accelerated their launch because it’s so important,” Rob Hinchliffe, an analyst with UBS Securities in New York, said. “They need to offer improved ride, performance, fuel economy and amenities.”
GM’s current lineup of SUVs and large pickups contributed about US$51-billion in annual revenue, or about 26% of GM’s total, Burnham Securities Inc. analyst David Healy said last month.
GM accelerated production of the 2007 models, known as the GMT900 line of vehicles, by several months. GM chief executive Rick Wagoner has said these new models and cost cuts are critical to improved results next year.
In a presentation to analysts Aug. 30, GM chief sales analyst Paul Ballew said U.S. sales of large SUVs peaked at about 505,000 in 2001 and 2002 and will fall to about 435,000 units this year. Sales of large luxury SUV models, such as the Cadillac Escalade, topped out at about 95,000 units in 2003 and will drop to about 91,000 this year, according to GM.
GM is trying to make the large SUVs ride more like cars with improved suspensions, GM vicechairman Bob Lutz said. He’s also trying to make them look more like cars through the use of improved materials, interior features and small gaps between body panels.
The automaker also will expand its offering of more fuel-efficient SUVs, based on car designs, from six models now to 14 by 2009.
“ We love the profitability, but we don’t like the fact that the company has to be so dependent on them,” Mr. Lutz said of the Tahoe and other large SUVs. “We’ve reduced our expectations on what the SUVs can do for us, and we’ve invested more in other products.”
The price of gasoline has soared to triple the levels Americans paid after the current line came out seven years ago. GM is now planning for oil prices to be higher than US$50 a barrel for the next year, Ballew said. Gasoline, now at US$2.788 a gallon, will eventually fall back to US$2, Mr. Lutz said.
GM in 2008 will introduce gasoline-electric hybrid versions of the Tahoe and Suburban. The hybrid engines will improve the average fuel economy on the large SUVs to 25 mpg, estimates David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.
“Right now, GM has the first large, truck-based SUV to have exceeded 20 miles per gallon,” Mr. Cole said. “ That’s the big step.” The 20-mpg figure is an average of city and highway driving. The 2006 Tahoe had a city mileage as high as 16 mpg and highway mileage as high as 20 mpg.
Bloomberg News