General Motors last year turned over development of its global small-car platform, known as Delta, to Europe.
The move delays the next-generation replacements for the Chevrolet Cavalier and Pontiac Sunfire in North America by at least two years. GM is using the time to look at various creative options to make money in North America's small-car market.
'It's important to look at not just traditional sedans in that segment. You've got to look at the whole spectrum of product that's out there with PT Cruiser-like products as well,' said Larry Burns, GM vice president in charge of worldwide product planning.
GM is paying a high price for delays in its small-car program. GM will be selling the aging Cavalier and Sunfire until 2004.
Meanwhile, the Ford Focus is selling well, and the Chrysler PT Cruiser looks like a home run, judging by initial interest in the car.
GM officials will not say what the future Chevrolet and Pontiac small cars will be or when they will be released. In fact, only a few things remain clear about the Delta platform, which the company reorganized last year:
GM's Adam Opel AG subsidiary in Germany is heading the global platform program. The reason: The Delta-based Opel Astra car and Opel Zafira minivan are crucial to that market.
The Saturn S series will be the first Delta car. It is expected by the 2003 model year.
GM is looking beyond the Delta platform for product ideas. Industry observers say the Sunfire replacement could be a version of a Toyota sport-utility based on the Corolla.
GM's next-generation Cavalier and Sunfire, based on the Delta global platform, were scheduled to launch during the 2002 model year. But when the cars flopped in customer clinics last year, GM shipped development to Europe, putting their release dates up in the air.
Last month, GM named Jon Lauckner as the vehicle line executive for the Delta platform. Lauckner, 42, is an American, but is based at Opel's International Technical Development Center in Russelsheim, Germany.
GM President Rick Wagoner said the Delta project has taught GM an important lesson. 'The lead region in the development of new products should be the region where the highest sales and highest profit opportunities are. And in this case, that's going to be Europe,' he told Automotive News in February.
'Then we'll use that development and make the degree of modifications necessary to make this product work in the other markets,' Wagoner said.
GM sold about 753,000 Astras in 1999, making it the best-selling car in its segment. GM Europe has sold 190,000 Zafiras since it introduced that vehicle last May.
Frank Colvin, another American who last year became GM Europe's vice president of engineering, said the Delta-based Astra will be launched on time. Insiders say the new car is due in 2003.
Moving the program to Germany 'doesn't change the Astra schedule at all,' Colvin said. 'It stays on schedule and shifts the lead over here (to Opel) of some of the resources. There's still going to be a team in the U.S. as well that tracks this for what they may do for a trailing vehicle as opposed to the lead vehicle,' he said.
Although GM's top priority is the next Astra, the first Delta car will be the Saturn S series in the 2003 model year. Jim Ulrich is leading the Saturn side of the Delta project in the United States. Ulrich reports to Lauckner.
But Saturn, known for its conservative styling, is not expected to break new ground outside of the traditional coupe and sedan segments. That will come with the next Chevrolet and Pontiac small cars.
'The growth will be in Traverse-like products, products that give more functionality, products that give a fresh look,' said Burns, referring to a Chevrolet concept vehicle unveiled in February at the Chicago Auto Show.
The Traverse is a small station wagon-like vehicle built on a small truck platform.
Industry experts believe GM won't limit itself to Delta-based vehicles to fill the small-vehicle niche. One possibility is a Pontiac version of an upcoming Toyota sport-utility based on the Toyota Corolla. The vehicle would be built at New United Motor Manufacturing Inc., GM and Toyota's joint venture assembly plant in California.
Another possibility for North America is the Zafira, a small minivan that is a hit in Europe.
'I don't think (traditional sedans) will go away abruptly. I think you're going to see a decline. So you have to make your portfolio decision carefully there,' Burns said.
NOT A REBADGING
Burns and Colvin insist GM has not lost sight of the North American small-car market just because it shifted development of Delta to Opel.
'It still means we're considering multiple cars off of this platform,' Colvin said. 'We don't have timing right now for the North American vehicles because they are going through redevelopment.'
Colvin said the next Chevrolet and Pontiac cars will not be rebadged Astras.
GM fails to succeed 'anytime we just rebadge a car without restyling it to a particular brand image or market,' Colvin said.
'We won't just simply rebadge, but we'll use a lot of common components to optimize the business case,' he said.
Burns said GM officials have talked about rebadging the Astra as a Chevrolet in North America. But the segments don't match well because the refinement of European small cars, considered mid-priced cars there, is much higher than that of North American small cars, which serve as entry-level vehicles.
But customer demands in North America could change. 'We're watching Volkswagen very closely because some of their products are doing quite well in the United States with that (European) level of refinement, plus price points,' Burns said.