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<H2>GM rushes introduction of high-profit big SUVs </H2>
BY JAMIE BUTTERS and MARK PHELAN
<SPAN
style="FONT-SIZE: xx-small; FONT-FAMILY: Arial,Helvetica,sans-serif">FREE PRESS
BUSINESS WRITERS</SPAN>
March 24, 2005</P>
NEW YORK -- In an ambitious move, General Motors Corp. will speed up the
launch of its new full-size SUVs, bringing them to market as early as Jan. 1, GM
Vice Chairman Bob Lutz said Wednesday at the New York International Auto Show.
New versions of highly profitable models like the Chevrolet Tahoe and
Cadillac Escalade will now hit showrooms more than a month earlier than GM
originally had planned. Making such a move so late in a vehicle's development
process is a rare and significant effort brought on by the company's weakening
finances, largely attributable to fast-rising health-care costs and loss of
market share.
Lutz said even advancing the timeline by a couple of months "would have a
dramatic effect on our earnings picture."
Another way the company can improve its bottom line would be scaling back the
health-care benefits negotiated by the UAW. White-collar employees get
"excellent" benefits, Lutz said, and the company could save millions of dollars
if hourly workers accepted the same coverage.
As for market share, Lutz discussed several new models intended to reverse or
at least halt the loss of customers to rivals. If those efforts fail, he said,
he could not rule out eliminating one of the automaker's "damaged brands," such
as Pontiac or Buick.
"Over time, if one of the troubled brands ... that's been undernourished for
many years, if it fails to turn around, then we'd have to look at a phase-out,"
Lutz said in response to questions at Morgan Stanley's Global Automotive
Conference in New York.
Lutz said he hoped GM wouldn't have to phase out one of its weaker brands at
a time when competitors like BMW AG and Toyota Motor Corp. are adding brands.
"That's what we're trying to correct with an exciting array of new products," he
said.
But he added that he and GM Chairman and CEO Rick Wagoner are determined to
invest money wisely.
"Rick is always saying: 'Let's not squander all our resources on trying to
overcome negative momentum. Let's put the resources where we've got positive
momentum, which is basically ... Cadillac, Hummer and GMC,' " Lutz said.
At the auto show, Lutz said his goal is to start building the next generation
of full-size SUVs late this year to go on sale Jan. 1, the first day possible
for a 2007 model. Besides the Escalade and Tahoe, the full-size SUV line
includes the GMC Yukon Denali and Chevy Suburban.
The company has killed some niche vehicles in order to concentrate its
resources on high-profit SUVs.
Lutz said the company is focusing on its "real priorities," listing crossover
vehicles and midsize SUVs after the full-size SUVs.
The full-size SUVs and pickups will be built on a basic design, or platform,
called the GMT900, the replacement for the GMT800, which has accounted for as
many as 1.85 million annual vehicle sales but is now showing its age against new
offerings from competitors.
Lutz's comments about earlier production suggest that plants in Janesville,
Wis., and Arlington, Texas, would be the first to begin production of the new
GMT900 vehicles.
GM had planned to show the first of those models -- the Escalade -- at the
North American International Auto Show in Detroit next January, according to
published reports. Now it plans to start selling them even before that show.
"This late in the game, that is very ambitious," said Michael Robinet,
managing director of CSM Worldwide in Farmington Hills.
He added that it makes sense for GM to try to get its most profitable
vehicles out as soon as possible. "In this competitive full-size SUV market,
anything they can do to accelerate the launch is good," he said.
Last week, GM said it would lose close to $1 billion in the first three
months of this year and cut its earnings outlook for the year by $1.7 billion.
The stock plummeted to 10-year lows.
On Wednesday, Lutz was clearly exasperated by speculation that the company is
working on a full-blown restructuring -- like the sweeping plant-closing and
job-cutting efforts of Ford Motor Co. and the Chrysler Group in recent years.
Rather, he sought to categorize the company's problems as essentially a failure
of marketing: pulling ahead sales with huge discounts and unprofitable fleet
sales.
The current situation at GM is not nearly as bad as the crises he experienced
at what was then Chrysler Corp., because GM is a stronger company overall, he
said, citing profitable operations in Asia, particularly China.
"This is the third or fourth time I've seen this movie, and it gets less
scary each time," he said.
Responding to reports criticizing weak sales of new GM cars like the Pontiac
G6 sedan, Lutz said the company should have set more realistic expectations. G6
sales will improve as dealers get a full range of engine offerings, such as a
more affordable 4-cylinder version.
Lutz rattled off other exciting vehicles GM has coming, such as the Hummer
H3, the coupe version of the G6, the Pontiac Solstice and the Chevrolet HHR.
Lutz also blamed the news media for not telling consumers how good GM's cars
had become and "perpetuating the myth of foreign supremacy."
Earlier in the day, Gary Cowger, the president of GM's North American
operations, acknowledged a litany of problems that have plagued GM and others,
such as rising health-care costs, huge pension obligations and growing
competition.
"But we're not going to dwell on those or use them as excuses. What we're
going to do is concentrate on how we're going to overcome," he said.</P></table>
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