GM Wedded to Large SUV Segment, CFO Says

NEW YORK – General Motors sees a future for its large SUVs, despite recent departures by foreign importers.

“We’re happy with the market,” Chief Financial Officer Dan Ammann says at a press conference here to unveil Chevrolet’s ’15 model Suburban and Tahoe.

The two share advances with GM’s other ’15 model large SUVs introduced the same day, including more efficient EcoTec3 powertrains that deliver improved aerodynamics, a quieter ride and greater estimated highway fuel economy based on GM testing.

GM through August held 66.5% of the large SUV market, including sales of the Cadillac Escalade, according to WardsAuto data.

The auto maker typically controls upwards more than 70% of the market, but it is in sell-down mode of the older models and has been changing over its Arlington, TX, assembly plant where they are made to make way for the redesigned units.

“We'll capture whatever is available,” Ammann says, referring to speculation other auto makers in the segment may exit and open the door for additional GM sales.

Industry sales through August stood at 26,971 units, well off the pace of the 600,000 annual deliveries between 1995 and 2005.

Escalating fuel costs have sent all but core customers fleeing from the large SUV segment in recent years, but Ammann says those buyers want the big vehicles for their extreme towing, large cargo capacity and passenger-carrying capabilities.

There's another good reason for GM's perseverance in this segment, says Joseph Phillippi, an independent automotive analyst, who estimates the auto maker earns $10,000-$15,000 per unit on the big SUVs.

Ammann acknowledges the Tahoe and Suburban are “very profitable,” but declines to specify how much they earn. He does reveal revenue generated by the industry’s large SUV segment, alone, would place it on the Fortune 400 list of companies.

The 12^th-generation siblings share no exterior panels with the Chevy Silverado pickup, Ammann says. However, the SUVs do share most exterior and interior components with one another, with the exception of the Suburban’s extra 19 ins. (48 cm) in length.

The ’15 Tahoe and Suburban go on sale in the U.S. first-quarter 2014.

Ammann also says the Chevrolet brand is on track to exceed 5 million units in global sales this year, 60% of them in overseas markets.