GM says it’s ready to tackle small cars

GM says it’s ready to tackle small cars
 



Lindsay Chappell

Automotive News | June 10, 2009 – 11:31 am EST

 

BIRMINGHAM, Ala. — Desperate to eliminate red ink, General Motors thinks it has created a factory method to build small vehicles profitably in North America. GM calls the method “interbuildability.”

The concept is better known among competitors simply as standardization, and GM is not the first to hit on the idea.

The automaker is standardizing its factories around the world, said Gary Cowger, GM’s group vice president for global manufacturing and labor relations.

One key to the strategy: Different models on the same architecture will have “plug and play” component modules, such as exhaust systems and front-end modules.

That means a crossover in Europe and a sedan in China might share the same chassis, engine compartments and structural components but still look remarkably different to consumers.

Elusive profit

Cowger said a new group of mid-sized cars is the first to demonstrate the system. That group includes the 2009 Opel Insignia and a new Buick Regal that will begin production in the United States next year.

Cowger said the global mid-sized program resulted in a 29 percent savings on engineering costs.

“Our global mid-size vehicles are rolling out now,” he said. “We’re now applying it to small cars in several highly differentiated body styles.”

Cowger described the global manufacturing strategy here last night at the Automotive News Manufacturing Conference.

He said that from the United States to China, new methods are being put in place to allow GM to spread vehicle development and production costs across multiple markets and products.

Cowger said the global factory makeover has been under way for four years and will be 82 percent complete by 2012.

GM’s frustration at producing small cars and trucks profitably in North America goes back to the 1980s. Competitors such as Honda, Nissan and Toyota proved adroit at turning out Civics and Corollas and compact pickups from U.S. plants, while GM struggled to find an acceptable profit margin in the segments.

GM created its small-car Saturn brand in 1985 in part to prove that it could make small cars profitably to compete with the Japanese.

But Saturn was built in isolation, noted industry consultant Laurie Harbour-Felax, who has been watching GM’s latest evolution.

“They built Saturn in one factory with no way to spread costs around,” she said. “What they’re talking about now is being able to spread their costs all around the world.”

Saturn ultimately proved a dead end for GM. The automaker plans to sell the Saturn brand to industry mogul Roger Penske.

Fuel-efficiency implications

But a portfolio of new small GM models is now coming for markets around the world. This month the company revealed that it intends to put an unidentified small vehicle into an undetermined U.S. plant.

The push for factory and vehicle standardization also could help GM reach stiff new federal fuel-efficiency targets looming for 2016. To reach the new requirement of a 35.5-mpg fleet average, GM might have to introduce cars as small as the A segment into the United States, Cowger said.

A-segment vehicles — also known as city cars — are rarely seen in the United States. The segment consists of vehicles such as the Smart ForTwo.

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