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GM analyst: High fuel prices a concern

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Reuters / August 30, 2005 DETROIT (Reuters) -- General Motors, which will soon roll out a new lineup of full-sized pickup trucks and sport utility vehicles, acknowledged on Tuesday that it was worried about high U.S. gasoline prices. Paul Ballew, GM's director of global market and industry analysis, said the impact on sales of fuel-thirsty pickups and SUVs was something the world's largest automaker was "wrestling with each and every day." Speaking to a meeting of investors and Wall Street analysts he also said GM -- which is struggling to return its North American auto business to profitability -- had wrongly been portrayed as saying that high gasoline prices had little or no effect on truck and SUV sales. "We are sensitive to it," Ballew said. "We're spending a lot of time with our customers, as well as other consumers out there in the marketplace, to really try to understand how it's affecting their behavior today and how it might affect their behavior going forward," he said. Ballew said GM sees oil prices easing from their current levels to not much above $50 per barrel in the next couple of years, however. And he predicted that sales of big SUVs and pickups would continue to be an important source of profits for GM. "The (light truck) market is still important, the market is vital for us," Ballew said. "We realize as we look at the market that we aren't anticipating the growth that we saw in the category, certainly for large utilities (SUVs) that we saw in the previous generations. But it's still a great place to do business, still a very important place for us to do business," he added. GM officials have said the company's new pickups and SUVs, which start making their debut early next year, will get about one more mile per gallon on average than the models they replace. That is not a big savings, perhaps, but Ballew said GM already has the most fuel efficient trucks on the road. He was referring to traditional body-on-frame, or truck-based pickups and SUVs, and not the car-based "crossovers" that are lighter and tend to go much further on a gallon of gasoline. "GM leads the segment, leads the category in terms of fuel economy and is committed to improvement in fuel economy going forward," Ballew said.

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If DOD only achieves 1 more MPG, then what's the point? The added weight and complexity/price sure isn't producing head turning fuel savings.... I guess a lot of it has to do with image as well though. GM needs to get the hybrids to market at LAUNCH!!!

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