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DATE News (chronologically)
04/10/07
Industry News
GM puts brake on rear-drive vehicles
This Chicago Tribune article says, General Motors has put a hold on future rear-wheel-drive vehicles.

"We've pushed the pause button. It's no longer full speed ahead," Vice Chairman Bob Lutz revealed in an interview.

Two of the most important RWD cars in the works are the Chevy Camaro sports coupe due back late in 2008 and the full-size, RWD replacement for the Chevy Impala sedan for 2009. Both are expected to be huge sellers and contribute major profits to a GM till burdened with IOUs the last few years.

"It's too late to stop Camaro, but anything after that is questionable or on the bubble," said Lutz, noting that also means Camaro derivatives -- along with a big Impala sedan, "if we call it Impala."

The RWD cars, you see, would be larger and heavier than front-wheel-drive cars or are high-performance models.

So it comes down to the matter of fuel economy. Or as Lutz says: "We don't know how to get 30 percent better mileage from" RWD cars.

That 30 percent bogey arises from a proposal by the Bush administration to raise corporate average fuel economy (CAFE) standards by 4 percent a year so cars would have to average 34 m.p.g. by 2017, up from 27.5 m.p.g. today. On top of that, the Supreme Court ruled last week that the Environmental Protection Agency can regulate carbon dioxide expelled by cars, a gas that contributes to global warming. The EPA doesn't do so now.

"We'll decide on our rear-drive cars when the government decides on CO(-2) levels and CAFE regulations," Lutz said, adding that limiting CO(-2) would increase mileage, too.

"Carbon dioxide is a natural byproduct of burning gas and directly proportional to the amount of fuel burned. If we legislate CO(-2) from cars, why not legislate we take one less breath per minute since humans release capricious amounts of CO(-2) each time they exhale?" offered a testy Lutz.

Lutz also points out that higher mileage will come at a price, with the proposal to raise CAFE certain to increase costs by as much as $5,000, which will be added to a car's sticker, an amount most consumers won't be willing to pay. There are no hard numbers for how much CAFE compliance adds to the sticker now.

"Rather than buy new, people would hang onto their old cars. We could eat the $5,000, but that would put us out of business."

Besides, those who see cars as more than just an appliance are eager for the new RWD offerings.

Among other cars affected are a high-performance midsize Pontiac, a replacement for the full-size Buick Lucerne sedan, a compact smaller than the current CTS at Cadillac and possible 300-horsepower versions of the Pontiac Solstice and Saturn Sky roadsters.

"This is very disappointing," noted Erich Merkle, director of forecasting for IRN Inc., in Grand Rapids, Mich. Most of the cars coming are necessary to GM's turnaround as showroom magnets.

"What the public buys makes CAFE work, not what the industry builds," Merkle added. "To improve mileage you change demand, not supply, by raising gas prices through taxes. But no politician is going to do that so they throw the responsibility on the back of the industry."
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