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"Can new lineup of big SUVs revive GM?"

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http://www.detnews.com/2005/autosinsider/0.../A01-322175.htm

Can new lineup of big SUVs revive GM?

Ailing automaker hopes 12 full-size models will invigorate a segment that has been shrinking.

By Bill Vlasic / The Detroit News


WARREN -- General Motors Corp. on Tuesday unveiled the most important new vehicles in its effort to turn around its troubled North American operations.


But by betting big on a redesigned fleet of 12 full-size SUVs, including the Chevrolet Tahoe and Cadillac Escalade, GM is trying to buck a consumer shift toward smaller, more fuel-efficient cars and crossover vehicles.

Rising gas prices have hit the large SUV segment hard this year, with U.S. sales down 11 percent through August.

Yet GM, the biggest player in the full-size SUV market, expressed confidence that its new lineup will invigorate a segment that has been steadily shrinking.

"It may contract, but it's not going away," said Mark LaNeve, GM's head of sales and marketing. "This is a very large, very important and very profitable market."

GM Vice Chairman Bob Lutz said the new SUVs will average an industry-best 20 miles per gallon for combined city and highway driving -- an incremental improvement over competitors such as the Ford Expedition and Toyota Sequoia.

"It can't hurt, but that segment is in a state of long-term decline," said David Healy, an analyst with Burnham Securities. "To me, GM is kind of whistling past the graveyard."

With GM losing $2.5 billion in North America in the first half of this year, the automaker can ill afford a lukewarm reaction to its new large SUV lineup, which debuts early next year.

Earlier this year, GM said it decided to launch the new sport utilities ahead of schedule in the order to speed its turnaround efforts.

"It's very important that GM reach the customer base that is turning in their big SUVs coming off lease," said Joseph Phillippi of Auto Trends Consulting in Short Hills, N.J. "It cannot afford to lose those people to other products."

The stakes are huge. Lutz said GM expects to sell about 375,000 full-size SUVs annually, and to account for more than 60 percent of an annual market he estimated at 750,000 vehicles industrywide.

But with gas prices fluctuating wildly in the wake of Hurricane Katrina, the industry will be hard-pressed to sell that many big SUVs this year.

"GM obviously didn't see $3-a-gallon gasoline when they made the decision to speed up the development of these vehicles," Healy said.

In 2004, large SUV demand slumped 6 percent. Tahoe has been the top-selling large SUV since 2001, but sales are off its 2002 peak of nearly 210,000 units. Tahoe sales fell 9.2 percent through August. The Chevrolet Suburban is down 16 percent, and the GMC Yukon 5.9 percent.

But Lutz said short-term spikes in the price of gas hardly diminish the appeal of brawny SUVs that can carry nine passengers and haul trailers and boats.

"We're realistic, and we don't expect the segment to grow," Lutz said. "But there are people who want and need the capabilities of a full-size SUV."

To that end, GM is embarking on one of its most ambitious vehicle launch programs in recent memory.

In the first half of 2006, GM will roll out 12 models off of its so-called T-900 truck platform, beginning with the Tahoe, Escalade and the GMC Yukon in the first quarter.

The automaker also is planning to offer hybrid gasoline-electric versions of the SUVs by 2007, but GM execs gave few details about sales volumes or fuel efficiency targets for the hybrid models.

The sheer breadth of GM's lineup dwarfs the competition in the large SUV segment

From the mass-market Tahoe to the upscale Escalade, GM went to great lengths to differentiate the new vehicles with unique grilles, headlamps and interior packages. The company also will offer quasi-pickup versions like the Chevy Avalanche and Cadillac Escalade EXT.

And while the dimensions of the big SUVs have changed ever so slightly, the company's designers gave the new vehicles a sleeker look with narrower front ends and sharply angled windshields.

"They're not smaller," Lutz said. "But they look smaller."

Gary White, GM's vice president of North American truck operations, said the product development team had two guiding principles for the new SUVs -- "living larger" and "driving smaller."

Additional head- and kneeroom was added in the passenger compartment, and second-row seats can be folded flat or "tumbled" forward for extra cargo space.

In addition to dual-stage air bags for the front passenger seats, GM put roof-mounted side air bags for all three rows of seats.

New suspension and steering systems and an available 6-speed automatic transmission will improve the overall driving experience, White said. New, available safety equipment includes rear-mounted cameras.

GM dealers hope the improvements will retain existing customers and draw new ones.

"We're really anticipating the release of the new vehicles," said Rick Resinger, new-truck sales manager at Champion Chevrolet in Howell. "We've done well with the current models and are looking forward to the '07s. As soon as we can start ordering, we've got customers ready."

Russ Shelton, owner of Shelton Pontiac-Buick-GMC, said he doesn't think he'll have a problem selling the new GMC Yukons when they arrive on his lot.

"For the majority, gas price is not a big issue," Shelton said. "We are still selling SUVs. It's new. It's beautiful. It's exciting. I wish we had it today."

GM executives declined to discuss pricing for the new models, except to say that they expect better profit margins than in the current incentive-driven environment. The current Tahoe, GMC Yukon and Cadillac Escalade are priced from $35,000 to more than $51,000, but GM has had to offer generous discounts to lure buyers.

"We've obviously had to accept some reduction in (profit) margins," Lutz said.

"We naturally plan to re-establish those margins."

While the automaker showed off the entire new lineup to members of the media Tuesday, the vehicles will be introduced to the public sequentially, beginning with the Tahoe's appearance next week at the Texas State Fair.

The challenge will be to build interest in each version of the SUV and to establish separate brand identities in the marketplace, something GM has struggled to accomplish with its passenger cars.

Lutz was quick to point out that the big-SUV introduction is only part of GM's "full-frontal product assault on the marketplace," and noted that the company expects to increase its lineup of smaller crossover vehicles from six to 14 within four years.

But there was no denying the importance of the large SUVs to GM's future prospects.

"This launch," said LaNeve, "is critical to us."
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Only if they are head and shoulders above the competition and can take sales from them, and that's a big IF. We'll have to wait for a test dive.
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Sales were declining for 7 year old trucks with a replacement coming soon? Who could have predicted that.
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...but remember. The Japanese are going to bury us in the truck market with their even heavier, more inefficent SUVs.
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http://www.detnews.com/2005/autosinsider/0.../A01-322175.htm

In 2004, large SUV demand slumped 6 percent. Tahoe has been the top-selling large SUV since 2001, but sales are off its 2002 peak of nearly 210,000 units. Tahoe sales fell 9.2 percent through August. The Chevrolet Suburban is down 16 percent, and the GMC Yukon 5.9 percent.

But Lutz said short-term spikes in the price of gas hardly diminish the appeal of brawny SUVs that can carry nine passengers and haul trailers and boats.

"We're realistic, and we don't expect the segment to grow," Lutz said. "But there are people who want and need the capabilities of a full-size SUV."

To that end, GM is embarking on one of its most ambitious vehicle launch programs in recent memory.

In the first half of 2006, GM will roll out 12 models off of its so-called T-900 truck platform, beginning with the Tahoe, Escalade and the GMC Yukon in the first quarter.

The automaker also is planning to offer hybrid gasoline-electric versions of the SUVs by 2007, but GM execs gave few details about sales volumes or fuel efficiency targets for the hybrid models.

The sheer breadth of GM's lineup dwarfs the competition in the large SUV segment

From the mass-market Tahoe to the upscale Escalade, GM went to great lengths to differentiate the new vehicles with unique grilles, headlamps and interior packages. The company also will offer quasi-pickup versions like the Chevy Avalanche and Cadillac Escalade EXT.

And while the dimensions of the big SUVs have changed ever so slightly, the company's designers gave the new vehicles a sleeker look with narrower front ends and sharply angled windshields.

"They're not smaller," Lutz said. "But they look smaller."

Gary White, GM's vice president of North American truck operations, said the product development team had two guiding principles for the new SUVs -- "living larger" and "driving smaller."

Additional head- and kneeroom was added in the passenger compartment, and second-row seats can be folded flat or "tumbled" forward for extra cargo space.

In addition to dual-stage air bags for the front passenger seats, GM put roof-mounted side air bags for all three rows of seats.

New suspension and steering systems and an available 6-speed automatic transmission will improve the overall driving experience, White said. New, available safety equipment includes rear-mounted cameras.

GM dealers hope the improvements will retain existing customers and draw new ones.

"We're really anticipating the release of the new vehicles," said Rick Resinger, new-truck sales manager at Champion Chevrolet in Howell. "We've done well with the current models and are looking forward to the '07s. As soon as we can start ordering, we've got customers ready."

Russ Shelton, owner of Shelton Pontiac-Buick-GMC, said he doesn't think he'll have a problem selling the new GMC Yukons when they arrive on his lot.

"For the majority, gas price is not a big issue," Shelton said. "We are still selling SUVs. It's new. It's beautiful. It's exciting. I wish we had it today."

GM executives declined to discuss pricing for the new models, except to say that they expect better profit margins than in the current incentive-driven environment. The current Tahoe, GMC Yukon and Cadillac Escalade are priced from $35,000 to more than $51,000, but GM has had to offer generous discounts to lure buyers.

"We've obviously had to accept some reduction in (profit) margins," Lutz said.

"We naturally plan to re-establish those margins."

[post="17729"]<{POST_SNAPBACK}>[/post]


The current ones were getting ancient compared to modern standards, and are notoriously OVERpriced from an MSRP standpoint, so no fake sales went down...BUT, overall, while not expanding leaps and bounds, the same people who were buying them before still continued to buy them and the market stayed quite steady.

Anyone know people who are on their 3rd, 4th, 5th, 6th, etc. Tahoe? I know several and we ourselves are already on #2 in the big GM 'ute stable of choices.

As far as pricing, here's what I think would work, considering just the Tahoe/Suburban:
*Tahoe LS 2wd--$30,595 base, with more standard features than anyone else
*Suburban LS 2wd--$31,595 base
*Tahoe LS 4wd--$31,595 base
....
*Tahoe LTZ 4wd--$43,595 with EVERYTHING
*Suburban LTZ 4wd--$44,595 with EVERYTHING

Edited my "pricing outline" above....

No more stripped base models starting at $37k and above, no more Chevy's with $53k price tags, and MOST important, no more $5k rebates or other insane blue light specials. Such a pricing strategy can't hurt margins too much, especially considering 95% of the GMT-800's sold to date were discounted to levels below those above anyway. Edited by caddycruiser
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I think the new trucks will help revive GM. If Chevy is smart, they will price the Tahoe where or less than where a Durango is, which would mean they'd have to be a little lower than the prices you gave Caddycruiser-but only by like $1,500 or something. Personally, I don't think the LTZ trim as it is should exist-that should be left solely to GMC and Cadillac-let Chevy take on the average American truck buyer (i.e. kill the 3LT trim while you're at it too possibly, and/or make LTZ simply a sporty LT extension, adding little extra comfort features, etc.). Chevrolet really needs to learn to not spread itself out so much to the point of overlapping Pontiac, GMC, Saturn, and Buick.
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I think the new trucks will help revive GM. If Chevy is smart, they will price the Tahoe where or less than where a Durango is, which would mean they'd have to be a little lower than the prices you gave Caddycruiser-but only by like $1,500 or something. Personally, I don't think the LTZ trim as it is should exist-that should be left solely to GMC and Cadillac-let Chevy take on the average American truck buyer (i.e. kill the 3LT trim while you're at it too possibly, and/or make LTZ simply a sporty LT extension, adding little extra comfort features, etc.). Chevrolet really needs to learn to not spread itself out so much to the point of overlapping Pontiac, GMC, Saturn, and Buick.

[post="17832"]<{POST_SNAPBACK}>[/post]


Agreed. I also don't see the point of the LTZ on the Tahoe, or any of the other Chevy models they introduced it on lately like the Cobalt, Impala, and Malibu, because it's just a fully loaded LT with a few unique trim pieces. Plus here, like you said, it kind of steps on the Denali's tail.

Looking at what I posted again, I'd agree the prices should be even lower, just to give buyer's that "wow...in a good way" kind of reaction when they see the trucks and then the sticker on them, especially when compared to the competitor's.
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The price thing can be a double edged sword. I wonder if consumers sometimes, when they see a price, undercutting the competiion, may think it's not as good.
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For a good, but INSANE comparison, here's the pricing breakdown of a fully loaded '06 Suburban 4wd LTZ:

MSRP: $56,840 :o :o
Invoice: $49,612

I never knew they had gotten this high, especially for a CHEVY.... :blink: ...some nice wheels and Denali leather or not.... :o
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I don't think Chevy, and to a further extent GM's top brass, gives a crap about stepping on the toes of the other divisions. Chevy is the star division at GM, the everything division, and it feels it needs to shine at the expense of all others, now including Opel and Vauxhall...
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Why hold back one division just to help another division? How about making the other division even better? Lets make the Malibu a really bad car so we can sell some G6s doesnt really make sense to me.
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The new trucks wil be AWSOME without a doubt... but let's face it the way to win back American CAR buyers is to build great CARS not trucks. Great trucks are nice but they're no substitute for our beloved B-bodys and musclecars.
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[quote]an incremental improvement over competitors such as the Ford Expedition and Toyota Sequoia.[/quote]

LOL

And ALREADY the media is writing this fuel economy gain off. What a surprise.... It just doesn't fit well with their "GM is an evil oil loving company that funds terroists" story they've painted, so they'll write it off.

[quote]"It can't hurt, but that segment is in a state of long-term decline," said David Healy, an analyst with Burnham Securities. "To me, GM is kind of whistling past the graveyard."[/quote]

Okay, so after 2 years of "analysts" and "journalists" whinning about GM's offerings being old and screaming that the asians are coming, they're just going to brush these SUVs off and accuse GM of being dumb?!?!?!?

These people are so blind it's pathetic... GM is doing a VERY smart thing by MAINTAINING it's share in the VERY profittable and still VERY big market. Again, the problem is M-A-R-G-I-N-S not numbers. If GM can sell an '07 Tahoe with a $1,000 rebate as opposed to an '06 with a $7,000 rebate then the balance sheets will start to look A LOT better and GM will have succeeded. Numbers and volume DO NOT matter so much now.

It seems like a pretty easy concept to understand, but I guess when you're a "journalist" or an "analyst" then common sense or intelligence must not come too easy. What a bunch of dumbasses.

[quote]But with gas prices fluctuating wildly in the wake of Hurricane Katrina, the industry will be hard-pressed to sell that many big SUVs this year.[/quote]

Derrrr, well, I guess it's a good thing these SUVs aren't selling this year. AND gas prices have leveled out just fine here at around 2.70/gallon. Not to mention any effects from hurricanes LIKELY won't be felt by the time these trucks go on sale.

[quote]"GM obviously didn't see $3-a-gallon gasoline when they made the decision to speed up the development of these vehicles," Healy said.[/quote]

No shit sherlock? NO ONE thought gas would climb as fast as it did and NO ONE thought we'd see another "Storm of the Century" either. See the correlation???????

[quote]"We're realistic, and we don't expect the segment to grow," Lutz said. "But there are people who want and need the capabilities of a full-size SUV."[/quote]

If Americans are throwing down 40-60K for an SUV then they can survive $3 a gallon gas. The spikes haven't slowed the economy any either.

[quote]GM executives declined to discuss pricing for the new models, except to say that they expect better profit margins than in the current incentive-driven environment. The current Tahoe, GMC Yukon and Cadillac Escalade are priced from $35,000 to more than $51,000, but GM has had to offer generous discounts to lure buyers.[/quote]

BINGO!!!!

Which is why the "volume" spiel has no merit until we start seeing SERIOUS double-digit declines in the market.

[quote]The challenge will be to build interest in each version of the SUV and to establish separate brand identities in the marketplace, something GM has struggled to accomplish with its passenger cars.[/quote]

But not with it's trucks, chief.


******* I now see how the media is going to hinder this launch. Once again, since they can't do it on merits because the trucks are so competitive, they'll cry wolf with the gas prices and try to disuade consumers from even CONSIDERING, let alone looking at the trucks. If they succeed, which is likely, GM is history.*******
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Sales were declining for 7 year old trucks with a replacement coming soon? Who could have predicted that.

[post="17784"]<{POST_SNAPBACK}>[/post]



LMMFAO!!!! :lol:
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With better gas mileage and a stunning interior, those that have bought the old one, will buy the new ones in droves.
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With better gas mileage and a stunning interior, those that have bought the old one, will buy the new ones in droves.

[post="18412"]<{POST_SNAPBACK}>[/post]

You're absolutely right. My dad owns a '99 Tahoe, and my brother and I showed him the '07. He was impressed and said he'll think about that over the XC90 he was considering.
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I THINK THAT CAN HELP A LOT BUT I THINK THEY NEED INTRODUCE A SPORT CAR LIKE THE CAMARO BECAUSE THE MUSTANG SELLS A LOT
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The new HOE looks like a fabulous product. The mpg gains are welcome. The interiors are knockout. The powertrains deliver big ass power. the exteriors look right. If the pricing is right, these FKERS will sell, 3 dollar gas or not. The mpg is just enough to seemingly keep it out of 12 mpg territory. There's enough folks that tow, just love huge trucks, etc. that these things will be fine. Me, I don't need one, I'd more likely buy a Freestyle or somehting car like, but i have to admit, I really do like the 07 Tahoe. GM has covered its ass relative to product. The pricing will determine its fate in the market.
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Now... I know this is a bit unfair since I live in sulphur-free Europe and everything... But why the hell don't they offer a diesel on the Tahoe? I've personally alway thought it a bit strange that these large, heavy trucks are actually still being pushed as gas vehicles instead of using diesels engines. which would undoubtebly improve tourque, hp and gas mileage... Now don't don't get me wrong, I LOVE gas engines... In Impalas, Chevelles and the sort, where their quick, high reving power get's their just deserved, but in a 4 ton truck? Why? Sure, it's fun when unloaded, but you hook ANYTHING up to it, the power goes WAY down and the gas mileage goes way up. Gas engines should do what they are best at and power cars that weigh less than 2 tons, and diesel engines should do the rest, at least until future technology comes around. Gas for fast cars, diesel for fast trucks. ^_^
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Now... I know this is a bit unfair since I live in sulphur-free Europe and everything... But why the hell don't they offer a diesel on the Tahoe? I've personally alway thought it a bit strange that these large, heavy trucks are actually still being pushed as gas vehicles instead of using diesels engines. which would undoubtebly improve tourque, hp and gas mileage...

Now don't don't get me wrong, I LOVE gas engines... In Impalas, Chevelles and the sort, where their quick, high reving power get's their just deserved, but in a 4 ton truck? Why? Sure, it's fun when unloaded, but you hook ANYTHING up to it, the power goes WAY down and the gas mileage goes way up.

Gas engines should do what they are best at and power cars that weigh less than 2 tons, and diesel engines should do the rest, at least until future technology comes around.

Gas for fast cars, diesel for fast trucks. ^_^

[post="19422"]<{POST_SNAPBACK}>[/post]

I agree up until the point your theory kills the great trucks like Lightning and 454SS. Beyond that, you're right, people who insist in driving H2s, Suburbans, Expeditions, and even the mid-size stuff like Explorers and 4Runners, should be in diesel versions. Pickups too, but I find the SUVs to be a bigger problem right now.
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Diesel has a bad reputation in the US and is pretty much banned in California. That's the short version.
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With better gas mileage and a stunning interior, those that have bought the old one, will buy the new ones in droves.

[post="18412"]<{POST_SNAPBACK}>[/post]


We will, without a doubt. I showed my mother those first clear pics of the '07 Tahoe a few months ago, and she loved it. Right now has a Suburban because of my brother and I(when I'm not at college...), the two dogs, and all our stuff couldn't fit in anything smaller.

With all the improvements, it's almost a guarantee that her replacement in years to come will be another, maybe even a Tahoe if she doesn't need as much space then. GM truck and SUV buyers are a VERY loyal crowd, believe me http://www.cheersandgears.com/public/style_emoticons/<#EMO_DIR#>/AH-HA_wink.gif

Also agree on the Diesel thing--I loved driving my friend's new '05 Jetta TDI, and when asked, my mother said "Yeah, I'd drive a diesel too, as long as I could get it in a car I liked and it was quiet". They're great engines, regardless of car brand, but a higher volume, very refined diesel would be IMMENSELY popular if offered in these 'utes. Edited by caddycruiser
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Well, Croc, diesel is still sold as fuel, and diesel trucks, old and new, heavy and light, comb these streets all day....but it does seem that there isn't much tolerance to have diesel passenger cars out here, which I find kinda weird. I wish more biodiesel and cooking-oil powered vehicles would find their way out here....
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