Industry Headaches Starting To Affect Product Plans
By Michelle Krebs October 28, 2008By Bill Visnic
The belt-tightening in the global auto industry is beginning to make itself shown in new-product plans in practically every region. Replacement models are being delayed, proposed new models are being canceled or reconsidered, and new-product investment, in general, begins to suffer the results of sagging sales and ever-tightening access to credit.
It seems to be getting more difficult for General Motors Corp., for one, to disguise the fact minimum comfortable levels of operating income have been reached. The company is enacting its first white-collar layoffs in decades and is seems increasingly desperate to find a ready cash stream.
In the past several weeks, it's become known GM has cancelled next-generation
replacements for its Chevrolet Tahoe and GMC Yukon fullsize SUVs (at least as we now know them), a future seventh-generation Corvette effectively has been put on indefinite "hold," and the Pontiac division won't see next-generation replacements for either the Solstice roadster or the G8 sport sedan, which was introduced just this year.
Chevrolet's recently unveiled -- and desperately needed -- replacement for the Cobalt compact car may face a production delay of nearly a year until 2011, reports Business Week, while Chevy's replacement for the popular and strong-selling Malibu also could be pushed back.
And there continues to be questions about new-model schedules at other GM divisions: discontinuation of the Solstice means Saturn loses the Sky, its version of the uniquely constructed two-seater, and speculation continues about the next-generation Aura sedan and the future direction for an entry-level Saturn, a spot currently occupied by the slow-selling Astra.
But GM's new-product juggling is but the tip of the iceberg. Other product plans falling victim to the global auto-industry recession include:
* The launch of the high-profile Tata Nano -- touted even before the first car is produced as being the world's cheapest mass-produced new vehicle -- reportedly will be delayed by several months, not all of which is due to the company's travails in securing a manufacturing site in India. The Nano was intended to be launched this month but will not appear until the first quarter next year. And a diesel version may be indefinitely shelved.
* Reports from Europe say the Fiat Group will delay the U.S. relaunch of its Alfa Romeo
performance brand by as much as several years. Always a dodgy proposition anyway, the Alfa launch has been postponed several times from its original 2007 schedule. Fiat now says it won't be 2010 -- the last date offered -- but 2011 instead. Alfa left the U.S. market in 1995.
* Plans for diesel-powered versions of full-size pickups from Toyota Motor Corp.'s Tundra and Nissan Motor Co. Ltd.'s Titan were sacrificed to deteriorating U.S. demand for large pickups, even so-called "heavy-duty" versions that, for domestic automakers, long have offered the option of diesel power.
* In Europe and Japan, major manufacturers BMW and Daimler AG and Mitsubishi Motors and Toyota Motor Corp., to name a few, are cutting back production to curb inventories and respond to corporate predictions for slowing sales next year in both regions.
* More ominously, with plummeting gasoline and diesel prices, some industry insiders are
beginning to question if even seemingly definitive investment commitments for smaller, more fuel-efficient models, advanced powertrains and hybrid-electric technology may suffer some kind of "reconsideration." Only last week, Chrysler announced the closing of the plant that makes its Dodge Durango and Chrysler Aspen, which means the demise of the newly launched hybrid versions of both.
Not only do declining fuel prices take the edge off the urgency to introduce these innovations, some critics continue to question the automakers' ability to sell U.S. customers a new generation of relatively costly compact and subcompact vehicles. Worse still, choked cashflow may provide the excuse -- genuine or no -- for pullbacks in costly new powertrain and hybrid investments.
Photos by Manufacturers
1 - Pontiac G8
2 - Pontiac Solstice
3 - Tata Nano
4 - Alfa Romeo 8C Competizione
5 - Dodge Durango Hybrid.
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