GM cedes small cars to partners

TOKYO — GM North America has stopped developing small cars from the ground up.

GM will use overseas partners to develop small cars for North America, leaving North American designers and engineers the secondary role of modifying platforms, said Robert Lutz, vice chairman for product development.

“I would say, yes, that it’s a question in a region of how (many features of a car) do you save and how much do you throw away,” Lutz said in an interview at the Tokyo auto show. “It’s safe to say that what you’re talking about is a logical way to go for the Cavalier replacement.”

GM has long had trouble making money on small cars in the United States. The company hopes to solve the problem by developing global platforms to spread fixed costs over higher volumes. But that means that GM’s North American product developers now have lost primary responsibility for small cars.

The Chevrolet Cavalier replacement, due in 2004, is an example of GM’s partnership approach. It will be built on the Delta small-car platform developed by Adam Opel AG.

But CEO Rick Wagoner said while GM will use its partners’ expertise in North America, U.S. offerings will have to be made right for the domestic market. U.S. compacts are considerably bigger than the smallest cars elsewhere.

Small cars in Europe, for instance, often are not cheap but win buyers by offering fuel economy and high performance. But as long as gasoline remains relatively cheap in the United States, minicars won’t do well there, Wagoner said. “The incentive isn’t there, and I don’t think it will change in the near future,” he said.

That means GM’s U.S. designers and engineers will have plenty of tweaking to do, even if many of the designs, platforms and major systems are developed elsewhere.

You can reach Dave Guilford at dguilford@crain.com

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