Aiming for a world-class launch,Corp. has begun building pre-production models of the Chevrolet Avalanche at its Silao, Mexico, plant.
Gary White, vehicle line executive-large pickups and sport/utility vehicles (SUVs), says his goal is to have the Avalanche in volume at dealers by early summer. He is forecasting sales of 100,000 units in the first year and says output could go higher if demand warrants.
That should be good news for GM bean counters, because Mr. White says the break-even point on the Avalanche is less than 50,000 units, the original forecast for first-year sales.
Silao will continue to build the Suburban alongside Avalanche, giving GM the flexibility to adjust the production ratio if needed.
Mr. White says that all seven GM fullsize truck plants are working at full capacity and that pickup output should hit 800,000-1 million units this year. Fullsize SUV production should reach 400,000-500,000 units, he says.
One goal is to capture 40% of the 650,000-unit heavy-duty pickup market where GM has lacked fresh product until this year.
One way GM was able to keep Avalanche development costs low is that it shares 87% of its components with the Suburban. To accommodate the Avalanche, the Suburban chassis has been given a Mid-gate design that allows the second seat to be folded forward. The niche truck will be built on both the 1500 and 2500 chassis, sources say.
Mr. White also tells Ward's that GM overall will at least maintain big pickup and SUV sales levels this year, while it should gain share in the heavy-duty pickup segment thanks to new models and a new diesel engine.
Mr. White says he does not expect the economy to cut into industry large pickup sales, which he forecasts at about 2.5 million units this year. “The economy could delay purchases a bit, but not for long,” he says.
The VLE predicts that there will more diversity in the pickup segment as buyers leave cars. GM plans to do these models without incurring huge development costs. “We're talking about a few hundred new parts, not thousands of new parts — not things that cost you a lot of money,” he says.
Mr. White says that future growth will come from such niche models. “Our research tells us that a lot of these sales will be conquests for GM until competitors can get into the segment with new products.”
To provide for possible growth from such models, GM has increased it fullsize truck capacity from 1.2 million-1.6 million units annually without building a new plant.
Mr. White concedes that new entries from Japanese makers could affect margins if GM doesn't improve its cost position. “We are working every single day to improve quality and reduce warranty costs,” he says. “I think we have the right product, but we have to be vigilant about quality and refinement.”