IHS Global Insight Perspective | |
Significance | GM has reportedly delayed the introduction of a convertible and high-performance Z28 version of its recently launched Chevrolet Camaro sports car, and has indefinitely shelved plans for a four-cylinder direct-injected turbocharged version, according to reports. |
Implications | The United Auto Workers (UAW) union also reports that no tooling has been installed at a Detroit plant that was scheduled to get a new compact minivan, despite a previous production date of 2009. Plant management has reportedly told the union that the MPV7 has been postponed. |
Outlook | Partially due to cash constraints, partially due to dramatically different market conditions, GM is adjusting its product plan to accommodate a much lower demand than previously envisioned. |
Several reports have come across the newswires in the past two days about increasing product delays and cancellations at General Motors (GM). First comes word that the company's recently launched Chevrolet Camaro will not see a convertible version as originally planned. According to Automotive News, the Camaro muscle car (which officially began production last week at the company's Oshawa, Ontario, assembly plant) was slated to get a convertible version in 2010, followed by the performance range-topping Z28 coupé variant the following year. "Neither one has been outright canceled," Chevrolet spokesperson Terry Rhadigan told the trade publication. Rhadigan said GM will attempt to reschedule the convertible version for 2011. The Z28 model was to be a competitor for the range-topping Ford Mustang Shelby GT500 and the Dodge Challenger SRT-8. In addition, a four-cylinder turbocharged version of the Camaro has reportedly been indefinitely shelved. That model, which would have used the 2.0-litre direct-injection turbocharged unit from GM's Delta and Kappa platform vehicles, makes 260-hp in the Pontiac Solstice GXP, among other models. "We're looking at it. We don't have anything approved," said Gene Stefanyshyn, GM's vehicle line executive for performance cars. "But with gas US$1.78 a gallon, we have to weigh where we put our poker chips."
But GM's performance cars are not the only ones reportedly facing production delays. The United Auto Workers (UAW) union Local 22 has told Automotive News that plant management has informed the union that the promised compact minivan that had been slated for GM's Hamtramck assembly plant in Detroit has been put on hold. The plant was to assemble a vehicle referred to in a 2007 union contract document as the MPV7, a seven-passenger compact minivan that was to be sold as a replacement to the Chevrolet HHR, Opel Zafira, and Vauxhall and Saturn models as well. But union Local 22 president George McGregor has reported that no tooling has been installed for the model, which was set to go into production this year, and that no other preparations are being made to build it. This contrasts with the preparations under way at the plant to make the Chevrolet Volt and Opel Ampera, according the union, which begins production in late 2010.
Outlook and Implications
While the cancellation and delay of these various models can probably be chalked up to GM's very visible cash crunch, it is also almost certainly a factor of the changing auto market itself. The days of 17 million projected unit sales are long gone, and are not returning any time soon, if at all. GM, along with several other auto manufacturers in the market, are adjusting plans for new models as well as manufacturing strategies. GM itself has announced that it will be closing an additional five plants, but has not yet specified which ones those will be. It is reasonable to assume that the Hamtramck plant, which currently makes the Buick Lucerne and Cadillac DTS (both of which end production in 2010) is relatively safe, as it has been named as the home of the Chevrolet Volt extended-range electric car (E-REV), and several ancillary plants have been announced to supply that model in the surrounding south-east Michigan communities. But the products that were also to have gone into Hamtramck (Delta-platform based compact vehicles, sharing a platform with Volt) may be delayed due to volume considerations in a smaller market. Given that GM is doing a lot more platform sharing between models in recent days, the company's flexibility in terms of where it can manufacture certain models also increases. Other versions of the Delta platform (the Chevrolet Cruze) are scheduled to be built at GM's compact car assembly plant in Lordstown (Ohio). The current HHR is built in GM's Ramos Arizpe (Mexico) plant, and is scheduled to be replaced by the just-announced Chevrolet Orlando, which is also based on the Delta platform, meaning that a Chevrolet version of a seven-passenger minivan may not be as certain as it was previously.
A delay to the convertible Camaro on the other hand is likely more about the cash available to do it, given that its biggest competitor (the Ford Mustang) is one of the most popular convertibles in the market. Not to have one would put Camaro at a disadvantage in trying to capture a sustainable slice of market share that is currently owned almost entirely by Mustang. Eliminating the four-cylinder version of the Camaro makes sense given that it would be costly, and that the fuel economy ratings for the six-cylinder version have done better than GM had expected (rating 29 mpg highway by the U.S. EPA). A four-cylinder turbo motor would likely improve upon that number, but not likely by much, given that any benefit to having the smaller engine would be tempered by the not inconsiderable mass of the Camaro itself. Whether or not GM actually pursues such a direction will likely depend on the popularity of the Camaro in the market, what additional corporate average fuel economy (CAFE) regulations come out of Washington, D.C., in the coming months, and what the price of fuel does in the next year or two.