Saturday, December 02, 2006

GM kills plan for minivans

Wednesday, November 22, 2006
GM kills plan for minivans
Following Ford's lead, struggling automaker will focus on crossovers.
Sharon Terlep / The Detroit News

General Motors Corp. may be bowing out of the minivan business.

Faced with a steep drop in demand for the family vehicles, GM confirmed Tuesday that it has scrapped plans to build new minivan models that would have debuted as early as 2009 under Chevrolet, Saturn and other nameplates.

While GM declined to comment on future vehicle plans, company insiders told The Detroit News that the company has no immediate plans to build minivans after it closes its last minivan-producing plant. The Doraville, Ga., plant builds the slow-selling Chevrolet Uplander and Buick Terraza minivans. It recently stopped producing the Saturn Relay.

It would mark the first time since 1985 that GM won't churn out the vehicles popularized in the 1980s by a generation of young baby boomer families.

Instead, the automaker, which has always been a small player in the minivan market compared to Honda Motor Co. and the Chrysler Group, will focus on crossover vehicles that blend the characteristics of cars and sport utility vehicles. GM is preparing to launch a group of large crossovers that include the GMC Acadia, the Saturn Outlook and the Buick Enclave.

"We do believe it is a declining segment," GM Vice Chairman Bob Lutz told The News on Tuesday. "Our new crossovers, Acadia, Outlook and Enclave with their three rows of seats and economical V-6 engines, can meet the same customer needs, minus the 'Soccer Mom' stigma.."

The Enclave hits showrooms next summer with the Acadia and Outlook on sale early next year; all three will be built in GM's new Delta Township plant near Lansing. A potential Chevrolet crossover may follow.

Lutz cautioned that GM has made no official move to pull out of the minivan market.

Ford Motor Co. did make such a decision earlier this year, abandoning minivans such as the Ford Freestar and Mercury Monterey. The Monterey is out of production and Freestar production is expected to end early next year. Ford is planning to build a new-generation family hauler based on the Ford Fairlane concept.

Minivan sales down 50%

Word of GM's change came Tuesday when United Auto Workers leaders at the plant in Spring Hill, Tenn., learned that the factory is no longer in line to build minivans next year. GM likely will find new vehicles for that plant, which has been building Saturn cars and trucks since that brand's 1991 debut, company officials said.

GM may decide down the road to build a new minivan line, though there are no immediate plans to do so.

The minivans would have been built on the same chassis design as the Enclave, Acadia and Outlook. Design concepts had been completed and some work had been sourced to suppliers.

But, in the end, GM determined its resources would be better spent elsewhere.

GM's minivan sales have fallen nearly 50 percent since 2000. In 2005, GM sold 166,000 minivans compared with 323,000 in 2000. Sales industrywide have dropped about 20 percent in that time.

GM's slice of the minivan segment was about 15 percent in 2005. Segment leader Chrysler had 37 percent of the market, followed by Toyota with 16 percent.

Auto dealers and analysts have long criticized the styling and practicality of the GM minivans, saying they were too small and unattractive to compete with Chrysler, Honda and Toyota.

"I don't think that GM ever got the minivan right," said Eric Merkle, forecasting director at IRN Inc., a consulting firm in Grand Rapids.

The early Lumina APV, made from 1990-96, "looked like a Dust Buster," Merkle said.

GM later came out with different designs, but in making those vehicles on a smaller platform designed to sell in Europe as well as the United States, those minivans were far too compact to compete here, he said.

"It's about utility and functionality with a minivan," Merkle said. "GM has been much too willing to limp along with a product that wasn't up to par."

GM restructuring under way

GM is in the midst of a restructuring plan to cut annual spending by $9 billion.

The company is looking to bring its manufacturing schedule more in line with demand for its vehicles and cutting off the minivan fits with that strategy.

The company's lineup of new crossovers is considered a key piece of GM's plan to revive its North American auto business after losing $10.6 billion last year.

"We're thinking differently about cost, and how we can knock out some big items," Troy Clarke, president of GM North America, said Tuesday during a speech in Detroit on GM's turnaround.

Clarke said the automaker has managed to pare back costs and that early sales of its new Saturn Aura sedan have been strong, with the company on track to sell 6,000 of the vehicles in November.

Down at the Spring Hill plant in Tennessee, union leaders vented frustration at the automaker's decision to cancel the minivan.

GM has no concrete plans to build a new car or truck at the factory next year, when production of the Saturn Vue sport utility vehicle moves to Mexico, according to a union memo Tuesday. GM is also discontinuing production of the Saturn Ion sedan, the other vehicle built in Spring Hill.

The plant has been somewhat of an anomaly within GM since Saturn was launched in 1990 to compete with low-cost imports like Toyota, Honda and Nissan.

"Now with only four months left before we cease production of the Ion and Vue, we still have nothing tangible to call our own," UAW Local 1853 President Mike O'Rourke said in the newsletter to members.

GM's Clarke said the company has no plans to stop using the factory and has other products that could potentially be built there.

While crossovers are promising, the minivan market is not one GM can afford to abandon, said Jim Quinlan, a Chevy dealer from Knoxville, Tenn.

GM may do well to take some time to retool their minivan concept, he said, but he hopes GM will return to the segment. "They've just missed it on the design side. But this is going to continue to be an important segment."

You can reach Sharon Terlep at (313) 223-4686 or

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