Hot Tahoe fuels GM optimism

[Variance]

Hot Tahoe fuels GM optimism

Sales of revamped Chevy SUV were up 50% in January despite slump in large-truck segment.

Brett Clanton / The Detroit News

When the lease on his old Chevy Tahoe expired, Michael Wujczyk toyed with going in another direction. Maybe something smaller. Maybe a different brand. But when he saw the 2007 Tahoe, he stopped looking.

"They just made some great changes to the truck," said the 52-year-old door distributor from Farmington Hills, who leased one of the new SUVs last month.

Such praise has helped GM get off to a good start with the redesigned Tahoe -- the nation's top-selling large SUV and a critical piece of the automaker's comeback strategy.

Fueled by a rash of advertising, exposure at events such as the Olympics and auto show hype, Tahoe is turning in good numbers despite a softening market for large truck-like SUVs.

Tahoe sales were up more than 50 percent in January. The 2007 model is fetching a higher average selling price than its predecessor.

Even without rebates, the new SUVs are sitting on dealer lots for less than a week before customers snatch them up.

"It seems like there's a lot of good initial buzz on this product," said Tom Libby, senior director of industry analysis at J.D. Power's Power Information Network.

So far, so good. But a true verdict on the vehicle is probably still months away.

Only on sale since Jan. 10, GM has booked just more than 4,000 sales and is still in the process of shipping Tahoes to dealers.

Tahoe, Ford Expedition and other large SUVs bankrolled Detroit in the 1990s and were once the vehicle of choice for American families. But their popularity has waned in recent years with the rise of smaller, more fuel-efficient alternatives, uncertainty over gas prices and growing attention on the environment.

For that reason, Wall Street has raised doubts about the wisdom of GM hitching comeback hopes on vehicles whose best days may be behind them.

"(The launch of the large SUVs) is important," said Merrill Lynch analyst John Murphy in a recent report, "but not a solution to GM's financial problems."

Large SUV sales plummeted last year after Gulf Coast hurricanes drove gas prices above $3 per gallon. Predictions are that the category will level out around 700,000 vehicles a year -- a far cry from its 1 million-a-year peak a few years back.

But while GM leaders acknowledge the segment has slipped, there is still plenty of life -- and profit -- left in the segment. They say they will use a new lineup of SUVs -- including Tahoe and updates of the Cadillac Escalade, Chevy Suburban and GMC Yukon -- to expand their 62 percent market share of the category.

The rollout of the Tahoe gives a flavor of how aggressive GM will be as it moves to strengthen its stance in large SUVs.

"We are going to be unafraid to tell our story," said Ed Peper, general manager of Chevrolet.

Anyone who has turned on a TV or opened a newspaper recently knows he's not kidding.

GM has launched an all-out advertising assault for Tahoe, trumpeting its new convenience features, versatility and $33,990 base price, which is $2,000 less than the outgoing model.

As a title sponsor of the Olympics, Chevrolet now is painting the airwaves -- and much of Torino, Italy -- with marketing messages, putting Tahoe at the center of the campaign. In a first, GM also shelled out to have a new Tahoe in New York's Times Square on New Year's Eve and paid to make Tahoe the official vehicle of the Daytona 500 NASCAR race next weekend.

GM does not publicly release its spending on advertising, but Brent Dewar, vice president of marketing for GM North America, said last week that the automaker's advertising budget this year will be roughly flat with 2005 despite more vehicle introductions.

The automaker spent an estimated $1.3 billion on advertising last year.

To silence critics who deride large SUVs for being rollover-prone gas hogs, GM introduced Tahoe with a raft of new safety equipment and improved fuel economy that rivals that of some midsize cars.

And in recent weeks, GM summoned Chevy dealers for exhaustive training sessions to make sure retailers hit on all the right points when customers enter their showrooms.

Don't big SUVs get bad gas mileage? Answer: The Tahoe gets more than 20 miles per gallon on average.

Don't large SUVs tip over a lot? Answer: Not with a new anti-rollover system. If it happens, Tahoe has optional three-row head curtain airbags.

And so on.

"It was very grueling," said Kelly Livingston, inventory manager at Brasher Motors, a Chevy dealership in Weimar, Texas, who recently attended a six-hour workshop on the new Tahoe in San Antonio. "I got the feeling a lot is riding on this vehicle."

GM is placing special emphasis on promoting the new Tahoe in Texas, which claims five of the vehicle's 10 best-selling markets. Playing up the fact that Tahoe is built at a plant in Arlington, Texas, GM has dotted roadways in the state with Lone Star flag-draped billboards reading "Made by Texans for Texans."

More broadly, GM is dividing its marketing to target two groups: new customers who may not have considered a Tahoe and loyalists who may be feeling the pull to other vehicle categories.

The Tahoe marketing touts its cleaner exterior design, new power-lift tailgate and a second-row seat that tumbles and folds at the push of a button. GM also equipped Tahoe with a 5.3-liter V-8 engine option that drops to four cylinders at cruising speeds to conserve gas.

But so far, Wujczyk, the door distributor who traded for a new Tahoe, hasn't detected a big improvement in fuel economy over his old truck.

"Right now, it's not getting the kind of mileage I expected," he said. "But we're still getting it broken in."

Though big SUV sales are under pressure, it's hard to deny their place in the U.S. auto market, said Brian Chee, managing editor of Autobytel.com, a Web site that compiles auto-buying research.

"A lot of people still need large SUVs, whether it's for towing or for passengers or cargo," he said. "It's a vehicle that isn't going to disappear just because of gas prices."

The entry of updated GM vehicles into the category may even help it rebound a bit in 2006, J.D. Power's Libby said.

"Will this help the whole segment? I think it will," he said.

Last year, with its profits tumbling, GM decided to move up the release of its new large SUVs to help fuel a rebound of its North American auto business. Instead of arriving in the spring as scheduled, they began arriving in January.

GM, which lost $8.6 billion in 2005, is eager to focus attention on 19 new models it is introducing this year. Big SUVs and pickups derived from GM's new full-size truck architecture, known internally as "GMT900," represent the biggest portion of that rollout -- and the best potential for improved profits.

In other words, getting them right is a must.

"I think everyone knows how important everything is for General Motors right now," said Steve Witcher, general sales manager at a Chevrolet dealership in Taylor.

Given the anxious climate and speculation that GM could be forced into bankruptcy if it can't correct its cost problems and improve sales, Chevrolet's Peper said he is confident the Tahoe is the right vehicle to lead off the company's comeback.

"This is a great vehicle," he said. "We're fighting back all the time, and I think America is rooting for us."

Link: http://www.detnews.com/apps/pbcs.dll/artic.../602150411/1148

[caddycruiser]

It is most definately a terrific truck, as should all the others in the line when they come out. After seeing a few in person, the pricing doesn't seem too far out of where it should be, but there's definately been a lot of people coming in to dealers, saying how nice they are, and then asking "where's the rebate", which I still think is inevitable, as soon as the buzz wears off.

I do wonder about the fuel economy thing though...numbers are better, but just like the Impala SS and the Grand Prix GXP, real world owners seem less than impressed. I'm thinking it may just be a "needs to be broken in" kind of thing, but I guess we'll see as each of the DOD-using cars ages a bit more.

[Cadillacfan]

The vehicles do need to be broken in. I noticed on a 04 Tahoe.. which is currently in my driveway that the mileage has gotten better and better with each passing month.

[toesuf94]

well, the mileage has been 15.9 in mixed driving on the first tank of gas. I filled it yesterday with E-85 to see how it runs or if I could detect a difference. Truck runs great with the E-85, but have noticed a mileage drop since I put it in - which they tell you in the manual will occur. My question is: Why will I use the E-85 and loose mileage when I am only saving 5-7 cents a gallon? If the government wants us to jump to E-85, then they had better be getting the subsidies that they are paying to mean something - say - we are buying E-85 at $1.00 less per gallon than Regular Unleaded. I bet a lot of people would go out and replace a lot of cars and trucks with new cars that will run the E-85. PLUS - you will see E-85 demand go UP - thereby offsetting the subsidies and then making it a profittable product. It is a win-win - the automakers with the New cars that run the flex-fuels will sell a whole slew of cars that the consumer's want and need to get back into the $1.00 a gallon category - everybody profits.

After typing this, I can see that all I am doing is beating a dead horse.

[Newbiewar]

accually we couldnt sell them till the 13th... this guys information is wrong

because on the 10th they annonced that they had some delays so it would be announced on the 12th, but on the 12th we still didnt have our invoices, they came on the 13th... and i figure it was the same as other dealerships

[FUTURE_OF_GM]

THIS is the kind of AGGRESSIVE roll out and fighting that GM needs to do with ALL of it's introductions..

The consumer MUST be informed, if GM is to survivie, that GM is making GREAT products. And that goes double now with all of the anit-GM people in the press.

I know GM can't allocate this big of an ad budget for every model. BUT, it CAN train it's dealers to BE BETTER and actually KNOWLEDGABLE about the product. It also can use the ad budgets very CREATIVELY (Examples: The Olympics, the G6 Oprah stunt and the free rides given when Toyota closed down the park in Chicago)

[Ultra Magnus]

Why will I use the E-85 and loose mileage when I am only saving 5-7 cents a gallon?   If the government wants us to jump to E-85, then they had better be getting the subsidies that they are paying to mean something - say - we are buying E-85 at $1.00 less per gallon than Regular Unleaded.  I bet a lot of people would go out and replace a lot of cars and trucks with new cars that will run the E-85. 

Thats a great point. You have to give people a reason. Five to seven cents just isnt enough. It doesnt have to be a dollar. I think even $.50 would work. People have to be able to see savings in real time.

[Newbiewar]

Thats a great point.  You have to give people a reason.  Five to seven cents just isnt enough.  It doesnt have to be a dollar. I think even $.50 would work.  People have to be able to see savings in real time.

but if your vehicle was capable of either fuel, and gas station offered ethonal for 7cents cheaper some people would buy it... expecally if there are performance gains, because i know sometimes i fuel up my trans am, and she feels like a different animal, like the last fuel i put in was sluggish... and of course when that happens i do spend a bit more fuel because i'm enjoying the extra power...

same thing might be noticeable with the ethonal.

also, ethonal would go straight to the hands of farmers... allowing our ecconomy to go into another revolution. i mean if you understand it costs 60$ a barrel to buy oil... and you know that is just going to go into the hands of some guy in arab to buy a rolls royce or two.

i know what happens when people find oil, my neighbor has a 6,000 square foot home and 5 acre property with tenis quarts and a underground shooting range... he found some oil in texas then he moved here to cali... (where everything is expensive)

can you imagine it if our farmers became like that?

it would create such a boom in our central ecconomy... our country is based off of agriculture, motor city, and technology... Japan is trying to steal motor city and technology... but we've got so much useable land... ethonal has more benifits then just the 7 cents you might save. it would be fantastic for our agriculture...

[scharmer05]

E85 sells from 40-60 cents less up here depending on the station. I know a lot of guys that run it. A lot of them run half E85 and half regular and don't loose hardly any mileage.

[Flybrian]

The claim that E85 is simply a way to mass-subsidize American farmers may be true, but that's the point. You want your money going to some foreign country (doesn't have to be Saudi Arabia...any country?) or to Americans?

Look at it this way: the hybrids out now will never, ever save you enought in gas to make up for their MSRP and any 'market adjustments' over the typical period of car ownership (4-8 years), but alot of people don't buy them to save gas - they buy it because they're tech geeks or environmentalists and want to make a statement by driving one.

Can't E85 make the same statement? "I'm willing to in fact spend a little more for a cleaner fuel grown domestically?"

[regfootball]

but if your vehicle was capable of either fuel, and gas station offered ethonal for 7cents cheaper some people would buy it... expecally if there are performance gains, because i know sometimes i fuel up my trans am, and she feels like a different animal, like the last fuel i put in was sluggish... and of course when that happens i do spend a bit more fuel because i'm enjoying the extra power...

same thing might be noticeable with the ethonal.

also, ethonal would go straight to the hands of farmers... allowing our ecconomy to go into another revolution.  i mean if you understand it costs 60$ a barrel to buy oil... and you know that is just going to go into the hands of some guy in arab to buy a rolls royce or two.

i know what happens when people find oil, my neighbor has a 6,000 square foot home and 5 acre property  with tenis quarts and a underground shooting range... he found some oil in texas then he moved here to cali... (where everything is expensive)

can you imagine it if our farmers became like that? 

it would create such a boom in our central ecconomy... our country is based off of agriculture, motor city, and technology... Japan is trying to steal motor city and technology... but we've got so much useable land... ethonal has more benifits then just the 7 cents you might save.  it would be fantastic for our agriculture...

do you know how much of a drain on taxpayer money and resources ethanol production is?

[regfootball]

let's see, our choice today, grow corn for food or fuel? what should we use our land for?

Great ROI, we'll burn one and a half gallons of fuel, to make each gallon.

ethanol should only function as an alternative niche fuel and should NEVER be relied on as a major source of our fuels in the future.

You know the first presidential primary is in Iowa, right?

Edited February 15, 2006 by regfootball

[Flybrian]

let's see, our choice today, grow corn for food or fuel?  what should we use our land for?

We're running out of land and food in this country, eh? Since when?

Its not like we're busy making things like skyscrapers, freighters, bridges, steel, or electronics - you know, all the real industry we auctioned off years ago - so we might as well do something.

[regfootball]

farm subsidy database

check out how much $$$$$ some folks are getting to grow our fuel.

or ARE WE JUST pumping it straight to Archer Daniels Midland?

Edited February 15, 2006 by regfootball

[regfootball]

so we might as well do something.

its kinda like saying, 'the short kid left the playground bleeding, so we might as well beat up the fat kid now'.

Edited February 15, 2006 by regfootball

[greg_nate]

let's see, our choice today, grow corn for food or fuel?  what should we use our land for?

Great ROI, we'll burn one and a half gallons of fuel, to make each gallon.

ethanol should only function as an alternative niche fuel and should NEVER be relied on as a major source of our fuels in the future.

You know the first presidential primary is in Iowa, right?

That's not even close to reality, let alone a valid argument. The U.S. annually gives away - as in *FREE*, more corn than we consume, to needy countries. FYI, Russia is one of them. To date, some farmers are still paid *NOT* to grow corn....and we *STILL* have a huge surplus.

Even if your statement were correct, which it is not in any remote possibility, what would you suggest? Continue racing with India and China to see how quickly we can consume all the oil in the world? And then what?

And so what if Iowa is the first presidential primary...it has been since the beginning of primaries, which predates any kind of oil crisis.

The only thing "niche" will be the feedstocks used for ethanol. Ethanol is here to stay, and it is coming on strong. Corn is not the only feedstock. Remember, we have a huge sugar industry and soy industry. And these plants are used for traditional methods of ethanol production. Cellulosic methods will be the way of the future - and for that, just about anything organic can be used.

[greg_nate]

farm subsidy database

check out how much $$$$$ some folks are getting to grow our fuel.

or ARE WE JUST pumping it straight to Archer Daniels Midland?

ADM is a small player in the ethanol industry.

And so what about the farm subsidies? Notice who the subsidies are going to...American farmers. Your plan has our money, and 1000 times the amount of farm subsidies, going to the Saudi Kingdom, Iran, Qatar, Venezuela and Iraq.

Your plan, has us involved in a near trillion dollar losing war with Iraq.

Don't ya think there might just be a better way?

[Imaj]

This is really great, and above expectations! GM could maintain its lead in the Full-Size SUV segment easily, and hopefully will generate some cash flow..

[4gm]

And in recent weeks, GM summoned Chevy dealers for exhaustive training sessions to make sure retailers hit on all the right points when customers enter their showrooms.

Link: http://www.detnews.com/apps/pbcs.dll/artic.../602150411/1148

GM should be doing something like this for EVERY car it sells.

[loki]

to really use the e-85 to it's full potential now, we'd have to up the compression ratio much closer to 12-13 since the E-85's octane is more like 100+ compared to the ratio's of mid 9's - 10s for 89 octane , that'd be like putting 21 - 33% more power in todays engines.

(based on the every 1 more compression ratio increases power 10%)

anyone concur?

[Newbiewar]

to really use the e-85 to it's full potential now, we'd have to up the compression ratio much closer to 12-13 since the E-85's octane is more like 100+ compared to the ratio's of mid 9's - 10s  for 89 octane , that'd be like putting 21 - 33% more power in todays engines.

(based on the every 1 more compression ratio increases power 10%)   

anyone concur?

but if you do that it cant run on regular gasoline, if you raise the compression...

is there a way to increase compression without altering the engine? i.e. if the engine notices there is e85, it should raise the compression, if its gas it should continue a 9.5-10.5 compression ratio

[greg_nate]

but if you do that it cant run on regular gasoline, if you raise the compression...

is there a way to increase compression without altering the engine? i.e. if the engine notices there is e85, it should raise the compression, if its gas it should continue a 9.5-10.5 compression ratio

I may be way off on this one, but I am not aware of any technologies supporting variable compression. For the most part, its a static number determined by piston size in comparison to the head chamber.

For me to change my compression, I'd have to either get a new set of milled heads, or swap my pistons.

However, there is another type of compression that some people refer to that is not static, and has more to do with compression during a particular valve event. I am hoping an engine guru will chime in.

I just don't see how they could do a variable compression motor...but then again, I couldn't see how they could do a DoD motor either, until I read about it

[pow]

What about high compression and knock sensors?

[David]

I for one love the new Tahoe look and checked it out at the local Chevy dealer here in Kirkland WA. Yet these same 2 Tahoes are still on the lot now sitting there for 3 weeks. The sales guy told me plenty of people have looked at them, but then went for a car that had better gas milage.

I checked with the Chevy dealer in Bothell WA and same thing there, they have a couple Tahoes and have not sold a one. So two dealerships with tahoes sitting 2-3 weeks. I have not seen any on the road and while only two dealerships, I have not really noticed that big of an up tick in Chevy marketing here. So I wonder just how good they really are selling.

[-Camaro-]

It is most definately a terrific truck, as should all the others in the line when they come out.  After seeing a few in person, the pricing doesn't seem too far out of where it should be, but there's definately been a lot of people coming in to dealers, saying how nice they are, and then asking "where's the rebate", which I still think is inevitable, as soon as the buzz wears off.

I do wonder about the fuel economy thing though...numbers are better, but just like the Impala SS and the Grand Prix GXP, real world owners seem less than impressed.  I'm thinking it may just be a "needs to be broken in" kind of thing, but I guess we'll see as each of the DOD-using cars ages a bit more.

The salesmen should point out the lower price on it and say there's no need for a rebate... Well if they're smart, which I doubt.

[vdoh182]

but if you do that it cant run on regular gasoline, if you raise the compression...

is there a way to increase compression without altering the engine? i.e. if the engine notices there is e85, it should raise the compression, if its gas it should continue a 9.5-10.5 compression ratio

Saab has an engine that can change its compression ratio based on the revs.

http://www.popularmechanics.com/automotive...gy/1266656.html

[toesuf94]

There are farmers getting paid to not produce anything - and it is sickening. What I had tried to say is this: Get the farmers to produce what we need to make the Ethanol AND feed the world - which is easily done now with today's farming methods and technology - and quit paying them to do nothing. Use the funding for subsidies for other projects around the country. If the corn is being produced by the farmers - and the market needs it for food/ethanol/cattle feed - whatever - then they will actually make money doing what they want to do - which is farm!

In order to get this demand up - we need cheap ethanol versus regular unleaded, which will in turn drive demand for new cars that will burn the CHEAPER and BETTER FOR THE ENVIRONMENT ethanol and quit pouring money into the Arab Nations. I am all for that. But I am not going to drive 30 miles out of my way to buy Ethanol ( we have 1 station here that has the E85 ) when I am not really saving anything. I want our dependence on foreign oil to end and watch the middle east start to pick on the other countries that are 'stealing their wealth' and leave the U.S.A. alone!

My plan does three things: People buy US built cars and trucks due to the availability of E85 at a cheap price so that Farmers are selling their crops instead of living off of subsidies to not grow anything, thereby ending the subsidies and turning the US Auto industry, the oil industry, and the Ag industry around...and it gives those weenies in the Toyota Prius less to whine about...so I guess that is four things... Am I that far off base???