GM, car models and driving patterns

GM and the US government are in overdrive reassuring the public and shareholders that the company filing for Chapter 11 bankruptcy protection will not affect parts of the business such as product development – meaning plans for low emission cars such as the Chevy Volt are safe.  In fact vice-chairman Bob Lutz last week said it was great to have ‘the ear of the president’ and that the company’s long-running development of its electric car would continue.

A Detroit Free Press interview with GM’s group VP for global product planning, John F. Smith, gave a similar message:

“We’ve steadfastly retained all our core, high-volume vehicle and advanced-technology programs,” Smith said. “We foresee no impact on product development.”

Key programs such as new families of midsize, compact, subcompact and minicars are on schedule. So is the high-profile Chevrolet Volt extended-range electric car due to go on sale in November 2010.

GM’s new chief executive, Fritz Henderson, explained the rationale behind this.

From Platts:

“Our view is that oil prices will trend higher. We learned one thing in 2008: [that] economic growth can drive sharp increases in oil prices,” Henderson said at a televised press conference, referring to the steep oil price rise up until mid-July of 2008.

Despite more stringent fuel economy standards, which the Obama administration laid out last month and which GM supported, Henderson said that ultimately the market and consumers will decide how successful the company will be.

“The consumers themselves have actually changed in many ways,” he said. “Consumers are behaving as if fuel prices are actually higher than they are today. So, I do think fuel economy will remain a key driver of the purchasing decision for consumers.”

The rise in gasoline prices along  with oil in the past two weeks suggests car buyers have been wise to not feel too comfortable with the lower prices post-July’s peak.

Despite this, the IEA, actual miles driven this summer might exceed their forecasts as prices are still relatively low.

Related stories:

GM to file for Chapter 11 bankruptcy protection (FT, 31/05/09)
Obama seeks to reassure on GM (FT, 01/06/09)

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