GM cancels contracts for Cruze/Volt engine plant

It was reported late last night that construction contracts for the new $370 million GM engine plant that was going up in Flint, Michigan have been canceled. The plant was to produce the new 1.4-liter four cylinder engine for the 2011 Chevy Cruze and Volt. GM spokeswoman Sharon Basel told AutoblogGreen that the intention all along had been for engines for the early production runs of the Cruze and Volt to be supplied from a European facility that already builds variants of GM's so-called "Family 0" powertrains. The Flint plant would not have been ready for start of production of Cruze next spring.

With the continuing financial crisis and weak sales, GM's European factory has enough capacity to supply Cruze and Volt for a time so that the automaker can conserve capital. The timing of construction was reaching a point where GM would have had to commit to spending millions of additional dollars that it doesn't have right now. Therefore, the company has opted to cancel the contracts and put the plant on hold until the situation improves. In the meantime, both vehicle programs are still on schedule and otherwise unaffected by these moves. Autoblog

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