GM Delays Nearly All New Product Development for 2009 and 2010

By Chris Haak

10.29.2008

Automotive News (subscription required) 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.

COPYRIGHT Autosavant – All Rights Reserved

Author: Chris Haak

Chris is Autosavant's Managing Editor. He has a lifelong love of everything automotive, having grown up as the son of a car dealer. A married father of two sons, Chris is also in the process of indoctrinating them into the world of cars and trucks.

Share This Post On

6 Comments

  1. I think the final paragraph says it all. Too bad the federal government is even dumber and will loan these inept people money – our money!
    Sure, the demise of GM would be catastrophic, but sometimes, just sometimes, catastrophes need to happen. What is capitalism supposed to be, after all?

  2. This is tough news to read. GM needs their competitive new products in showrooms now, and delaying their arrival means that the company has less money coming in (due to fewer sales) to fund new vehicle programs.

    It’s unfortunate (or devastating) that the Camaro is getting the green light while the Cruze is being put on hold. By the time the Camaro is on sale it will be old news, and with its pony-car heritage and low fuel economy numbers it will only sell to a small niche in the market.

  3. I’ve always wondered why car companies, especially GM, promote future products so early and then people are tired of looking at them by the time they arrive. I remember years ago Chrysler doing it with the first Neon and more recently GM with the Solace/Sky. I think a full reveal about 6 months before first deliveries is more than ample.

  4. I spotted the latest rumor on Autoblog who mentionned the Reuters article
    http://www.autoblog.com/2008/10/29/gm-ceo-heading-to-japan-to-talk-with-toyota-expanding-business/
    I guess this rumor might be quickly denied and eclipsed with another upcoming future rumor: Rick Wagonner left his place of CEO to…Carlos Ghosn…

    Back to the Camaro, if they could find a way to put it more efficient, like these old rumors of a turbo-4 (or even putting the future Duramax 4.5L V8 under the hood who can use some biodiesel B20) but that’s another story for another subject

    And Pete DeLorenzo writen a good rant on Autoextremist this week http://www.autoextremist.com (rant #469)

  5. There’s only one situation in which this makes sense: if they figure they’re likely to merge with another viable company (Chrysler doesn’t count) or if they figure their odds of survival are slim.

    In the long run, you lose far more money from delaying the development of (good) products. GM did this last around 1990, and it took at least a decade to get product development back on track. In the interim, everything is at least a half-generation behind the competition. And it costs a ton of money to stop a program then restart it.

  6. As I was reminded earlier today, this delay means Saab’s desperately-needed replacement 9-5 and 9-4x (and eventual 9-3 and hopeful 9-1), and Cadillac SRX are also on hold. Major bummer.

    When I read the Reuters article this afternoon about GM’s talks with Toyota I was surprised. A lot of ideas being thrown around that wouldn’t have seemed plausible just a few short months ago…

Submit a Comment

Your email address will not be published.