GM wants production to respond to gas prices
GM boss Rick Wagoner wants the company to have the flexibility to change its mix of vehicles according to gas prices.
Speaking to the Associated Press last Wednesday, Wagoner said GM's current level of flexibility is "not as good as it needs to be." GM has already announced reductions in production capacity, so flexibility in building more vehicles with higher fuel economy should be easier if the price of gasoline hits $4 or $5 a gallon.
Another move is to build more vehicles off the same platform globally, again making it easier for a North American plant to switch to more fuel-efficient models when consumer demand increases. The same platform would support 4- or 6-cylinder engines and production would be based on consumer demand.
Analysts note that Asian automakers already have the flexibility to build different vehicles on the same assembly line. The old business model of setting up one line to produce large numbers of a single vehicle won't work as the auto market becomes more fragmented, they warn.
[Source: Associated Press via WHAS, Louisville, KY]
Reader Comments (Page 1 of 1)
motorman 10:45AM (9/11/2006)
the depreciation and insurance cost of owning a car out weight the cost of the rise in gasoline prices.the people who change cars because of the rise in gasoline prices are just fooling themselves
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CM 5:27PM (1/18/2007)
Looks like what GM wants is to sell those big gas guzzling high profit margin SUVs whenever the gas prices fall, then quickly shift to high milage cars when gas prices rise. Problem is, people are starting to catch on that prices are trending up and price drops are short-lived.
GM will keep getting stuck with a surplus of gas guzzlers that must be highly discounted to sell, causing a loss of that fat profit margin.
Companies that have figured out how to get a good profit margin on fuel efficient vehicles will thrive.
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