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Gas prices fuel decision to shift gears on SUVs and full-size pickups
By Jeff Karoub
Associated Press
Published on Friday, Jun 20, 2008
DETROIT: General Motors is indefinitely halting a major overhaul of its full-size pickup trucks and sport utility vehicles as it deals with a drastic drop in their sales.
Spokesman Tom Wilkinson said Thursday the automaker instead will work on more modest updates and enhancements as it shifts resources toward higher-mileage vehicles. The move has been largely spurred by rising gas prices that have radically changed customers' buying habits, he said.
''We're delaying it — at least until we have a better sense of where the market is going,'' he said. ''There's now so much uncertainty of where the full-size truck market is going, primarily because of the increase in fuel prices.''
U.S. pickup sales in May fell more than 38 percent, and the company has said the market declined more rapidly than expected last month. Detroit-based GM announced this month it was closing Oshawa, Ontario, and three other pickup truck and sport utility vehicle factories as $4 per gallon gas has caused sales to tumble.
He said the strategy has started to pay off with strong sales of cars such as the Saturn Aura and Chevrolet Malibu.
On the truck and SUV front, Wilkinson said GM believes the segment will continue to be competitive even without a major redesign. The company plans updates that includes hybrid versions of its truck lineup this fall, and is looking at new powertrain options, such as diesel.
''Nobody should interpret this as us backing away from a commitment to the full-size truck market,'' he said. ''We're not backing away from an aggressive role, but it will be a smaller market. We'll put the appropriate resources toward it.''
Wilkinson said record-high gas prices aren't the only issue. Automakers also are dealing with a new federal corporate average fuel economy (CAFE) law requiring them to raise gas mileage of their vehicles.
''Even if prices hadn't taken a sharp spike . . . CAFE was going to force changes in the full-size truck market anyhow,'' he said.
Aaron Bragman, an auto analyst with Global Insight, calls the shift a ''prudent'' move that doesn't jeopardize GM's competitive position.
He said Ford's next big pickup development doesn't come for a couple years, when it hopes to launch a smaller, lighter and more fuel-efficient pickup dubbed the F-100.
Ford President of the Americas Mark Fields said his company continually monitors the marketplace and could adjust its product development plans as well.
The company is rolling out a new F-150 pickup truck in the fall, so it has plenty of time to evaluate work on the next generation pickup, Fields said.
DETROIT: General Motors is indefinitely halting a major overhaul of its full-size pickup trucks and sport utility vehicles as it deals with a drastic drop in their sales.
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