DETROIT - In the face of high gasoline prices, General Motors is counting on improved truck sales to offset modest expectations for its large SUVs.
GM plans to build the next generation of its full-sized SUVs in two assembly plants, rather than the current three.
But the automaker expects total full-sized truck capacity to stay about the same. GM will allocate more capacity to its full-sized pickups, chiefly the Chevrolet Silverado and GMC Sierra.
GM built about 1.7 million full-sized trucks and SUVs in North America last year.
GM has built the current generation of full-sized SUVs in three plants: Janesville, Wis.; Arlington, Texas; and Silao, Mexico. But if the segment mix holds at its current level, Silao will primarily build the Silverado and Sierra.
Next month, the automaker will shift most of its Silao production from SUVs to full-sized pickups. When asked whether Silao would switch back to SUV production when GM's new full-sized SUVs debut next year, Robert Lutz, GM's vice chairman of global product development, replied: "I think we're properly balanced right now."
Speaking at a press event last week, Lutz said that "as near as we can tell, two plants are fine" for full-sized SUVs.
But the plant will be flexible enough to build some SUVs there if needed, GM says.
GM's production plans reflect lowered expectations for full-sized SUVs in an era of rising gasoline prices. Though they want to maintain market share, GM executives are closely watching gasoline prices and consumer attitudes.
As full-sized SUV sales have cooled and pickup production remains strong, GM spokesman Stefan Weinmann says the switch in Mexico "helps address the most recent softness of the full-sized SUV market."
"We can balance things according to market requirements," he says.
In Silao, GM builds the Cadillac Escalade EXT and ESV; Chevrolet Avalanche and Suburban; and GMC Yukon XL. The plant built 240,845 vehicles last year.
Through August, full-sized SUV sales for all brands sold in the United States are down 10.7 percent from the year-ago period, while full-sized pickup sales are up 9.1 percent.
U.S. sales of GM full-sized pickups have increased 18.1 percent from last year, while full-size SUVs have dropped 9.3 percent.
GM expects the full-sized SUV segment to maintain its current levels and believes it can continue to take 62 percent of the market. Lutz says if the segment were to increase, there is the option to increase production.
"If for some reason our conservative estimates are confounded, and we experience insane demand for these things, we probably have the flexibility to convert, but that would be an extremely good news scenario," Lutz said.
GM would like that kind of flexibility as it rolls out its GMT 900 SUVs and pickups.
Gary White, vice president and vehicle line executive for full-sized trucks, says the automaker has been working to add flexibility in other GM plants. White says the ability to switch between SUVs and pickups will protect against large swings in consumer demand.
"We will look at some flexibility with our pickup lines in some of our facilities as well," White says. "I don't know that I'd put flexibility in every single plant. But somewhere in that chain you've got to have flexibility among your SUVs and pickups."
Once GMs plants are completely tooled and the supply base is established, White says, GM will follow the full-sized sales market closely.