GM Hopeful For Big Hit in 2006

LOS ANGELES – General Motors Corp. is one or two products away from reversing its flagging fortunes, the auto maker’s vice president-sales and marketing says.

Mark LaNeve makes the bold statement at the Greater Los Angeles Auto Show, on the heels of GM’s announcement that its sales declined 4% last year compared with 2004, while its market share was down 1.6 percentage points to 26%, according to Ward’s data.

Mark LaNeve

The auto maker unveils seven new production vehicles and a concept here, including a high-performance GXP-badged turbocharged version of the popular Pontiac Solstice roadster.

The Solstice is sold out, he says. And there is similar demand for its Saturn twin, the Sky, which debuts this year.

“This is a product-driven market,” LaNeve tells journalists. “It doesn’t take a whole lot to change momentum. It takes a couple good products. You saw that with the 300C at Chrysler a few years ago.”

But at volumes in the 5,000-unit range for Sky, and between 15,000-20,000 for Solstice – about 10% of which is reserved for the GXP model – these cars are unlikely to turn the tide for GM.

Coupled with increased competition from Asian auto makers, the steadily rising cost of providing employee and retiree benefit obligations have eroded GM’s profits.

This has prompted the company to announce plans to cut 30,000 jobs and close or downsize 12 facilities within three years. (See related story: GM Plant Closures Begin; SUV Lineup Dwindles)

This has not helped GM’s image in the marketplace, further compromising its ability to staunch the flow of red ink.

“We think our product story has gotten lost in all the reporting about financial results,” LaNeve says.

“Can’t blame anybody. We’re the ones that had the bad financial results, so you open yourselves up to that. But what gets lost in that is a lot of excellent products that we brought to market.”

He adds: “We’re not looking for huge growth out of the industry next year. But we certainly don’t see anything to make us think there’s any big decline or trough.”

In addition to the Solstice GXP, GM’s Chevrolet division unveils the ’07 Aveo compact sedan; the ’07 Suburban fullsize SUV; and the Corvette Z06 Daytona 500 Pace Car. Meanwhile, from Saab there is a 20^th anniversary edition 9-2, and from GMC there is the Yukon XL.

Asked about the absence of cross/utility vehicles, the industry’s hottest vehicle segment, LaNeve promises GM will – later this year – unveil a “segment-creating fullsize crossover.”

He declines to reveal details, but adds it will feature a “bigger configuration than what’s been out on the market so far.” GM has a slate of large SUVs on tap off its upcoming Lambda platform.

The auto maker already is well-represented among CUVs, LaNeve maintains. The addition last year of the Chevy HHR and Pontiac Torrent helped add 100,000 units of volume to its lineup.

And the auto maker already has committed to increasing its CUVs to 14 entries before decade’s end.(See related story: GM Doubling CUVs by 2010 )

LaNeve is not worried sales of the new SUVs will be cannibalized by the growing consumer interest in CUVs. “We believe there’s a market for both,” he says.

LaNeve also uses the show to announce GM’s partnership with the state of California, Chevron Technology Ventures and Pacific Ethanol. Designed to help proliferate the use of alternative fuels, the venture will see the state operate a fleet of ethanol-powered Chevrolet Impala sedans and Silverado pickups.

To this end, GM also unveiled a Saab 9-5 sport wagon that is powered by a gas-ethanol (E85) fuel mix.

Such alternative fuels could prolong America’s love affair with gasoline-thirsty vehicles such as large SUVs, LaNeve suggests. It will not hurt GM’s bottom line either, as the auto maker is poised to roll out a parade of new, redesigned SUVs.

“You take the new Yukon and drive it 15,000 miles (24,140 km) on E85 for the year, you would save 100 gallons (379L) of petroleum (compared with driving a compact hybrid),” LaNeve says.

“If the issue is the environment, fossil-fuel dependency, dependency on foreign oil, (then) ethanol is the best game in town.”

And in remarks that echo those of his cross-town counterpart at archrival Ford Motor Co., LaNeve declares the Big Three all but dead as an institution. Detroit auto makers are competing with the world now, not just each other, he says. And may the best product win.

Mark Fields, president of Ford’s North American operations, made similar admonitions earlier. (See related story: Ford Preparing to Earn Bragging Rights as America’s Car Company )

“It’s a big market with a lot of good competitors,” LaNeve says. “We think buying American is the last reason you should buy a GM product.”

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