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DATE News (chronologically)
05/26/09
automotive
US government to tell GM what cars to build
I'm from the government, and I'm here to help you."  The punch line to an old joke embodies the fear that grips many people over what government control will mean for General Motors.

Will the automaker be free to develop cars and trucks of all types, or will bureaucratic meddling force GM to abandon popular and profitable model lines like trucks, luxury and performance vehicles? Will GM become Government Motors, trying to jam politically correct minicars down the throats of Americans who don't want them?

It appears not, although GM will certainly rely less on pickups and SUVs in the future.

Market steers GM to smaller product
Is the U.S. government's rescue plan for General Motors a business strategy or social engineering?

The question arises daily. Seemingly knowledgeable people declare that the government will force GM out of the profitable and important business of selling trucks and family vehicles, allowing it to build only small cars, hybrids and electric vehicles.

Fostered by Detroit's distrust of Washington rule makers and the secrecy surrounding the Presidential Automotive Task Force, the idea seems to have little basis in reality.

"The government is not going to prevent GM from making every type of vehicle it can sell profitably," a source close to the task force said. "The goal is to put the company in a position to succeed.

"The government is not going to be in the business of telling" GM "what products they can build," said the source, who spoke on the condition of anonymity.

GM's future product line will certainly consist of more cars -- particularly small and fuel-efficient ones -- and fewer trucks.

That's a natural and necessary response to the changing automotive market, however, not acquiescence to government demands.

"Small cars will only be part of the landscape," said Stephanie Brinley, analyst with AutoPacific. "There will always be a need for family vehicles and trucks. The government recognizes that GM needs a complete model range."

The goal is to make money, repay the taxpayers' investment and end the wild swings from profit to loss that have marked GM's last decade.
There's a strong case to be made that GM wouldn't be in this sad state if it had paid more attention to cars and been less enamored with pickup and SUV sales for the last decade.

"Car companies across the industry are making a play for the small-car market" because of rising fuel prices and fuel-economy standards, the government source said. Ford Motor Co. has not asked for any government assistance, but it's converting several truck plants to build smaller vehicles.

"We are a full-line vehicle manufacturer," said Kerry Christopher, spokesman for GM's Washington office. "We're working on" fuel-efficiency "technologies to meet the needs of our customers in all segments of the market, including big vehicles.

"The task force agrees we need to do that."

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