Strong Products Signal GM on Road to Recovery

The formidable challenges playing out in critical arenas over the last year would have been enough to take the focus off new product for any company.

Barbara McClellan

January 10, 2007

3 Min Read
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“Sweet” might best describe General Motors’ moment to exhale.

The auto maker’s sweep this month of the 2007 Car and Truck of the Year awards presented at the North American International Auto Show in Detroit could not have come at a better time.

With 11 vehicles vying for the car category and 15 for the truck designation, recognition by 49 automotive journalists from the U.S. and Canada appears to signal new product-development strategies are working.

Particularly considering GM’s Saturn all-new Aura midsize sedan beat out two strong Japanese-brand finalists, the Toyota Camry and Honda Fit subcompact, and its redesigned fullsize Silverado pickup topped the all-new Ford Edge and Mazda CX7 cross/utilities.

Indeed, GM’s win marks only the second time in the 14-year history of the annual competition that one auto maker has taken both awards. Honda won last year with its all-new ’06 Civic and Ridgeline midsize pickup.

But the win also is remarkable for other reasons. The formidable challenges faced by GM playing out in critical arenas over the last year would have been enough to take the focus off new product for any company:

  • Sliding vehicle sales due to rising fuel prices.

  • A boardroom drama pitting Chairman and CEO Rick Wagoner against billionaire shareholder Kirk Kerkorian’s proposed partnership with Carlos Ghosn’s Renault-Nissan Alliance.

  • A delay in filing first-quarter financials due to accounting irregularities.

  • A drastic restructuring calling for the closing of 12 plants and the elimination 34,000 employees, about 30%, of its hourly workforce.

While GM in 2005 lost $10.6 billion, it says it now is set for profitability in 2007 thanks to massive cost cutting over the last 12 months. But analysts repeatedly have told Detroit’s Big Three aggressive cost-cutting their way to profit is not sustainable without strong product.

And that’s where winning the car and truck awards come in.

It sends a message that while there were “bombs across the air last year, every way, shape and form they could have come, the vast majority of the people at GM were doing exactly what they should,” Wagoner tells reporters at the auto show.

That would include creating the Chevrolet Volt Concept, arguably one of the most important concepts to debut in Detroit. GM says the plug-in hybrid-electric vehicle is capable of 150 mpg (1.56 L/100 km). But unlike traditional HEVs, the Volt’s internal combustion engine does not provide propulsion.

Instead, it is designed to run solely on charged electric power for a range of 40 miles (64 km). When that power supply starts to wane, a 1.L, 3-cyl. turbocharged engine, burning gasoline or alternative fuels, kicks in to generate power to run the electric motor.

The Volt stores energy via a lithium-ion battery pack – supplier technology that is still very much in the development stage.

Mark LaNeve, vice president-sales, service and marketing, acknowledges it’s “very important” from an engineering and public perception standpoint for GM to bring the Volt to market.

“The idea is elegantly simple,” he says. “It gets people to think about (fuel economy issues) differently.”

More importantly, it will get people thinking about GM differently.

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