GM’s next-gen full-sized SUVs to carry a cost premium to meet new fuel-economy rules

Article by Christian Andrei, on May 28, 2011

With General Motors’ recent announcement that it will spend $331 million for the retooling of its Arlington, Texas, plant, it’s speculated that its next generation full-sized SUVs likely will carry a cost premium to be able to comply with new fuel-economy regulations. The Arlington plant is being retooled to produce the redesigned Chevrolet Tahoe and Suburban, GMC Yukon and Cadillac Escalade.

The current generation of these models is currently being built at the plant. GM didn’t disclose a time frame but sources say that these SUVs will arrive in showrooms in 2013 as 2014 models.

Tracy Handler, an analyst at IHS Automotive, said that producing them is more expensive since lighter weight materials are used and so prices will be higher. How consumers will respond to GM's full-sized SUVs is uncertain especially since gasoline prices are rising and the government is raising its standards on fuel economy and emissions.

The Automotive News Data Center said that overall, the demand for large SUVs and SUTs has plunged after reaching over 1 million units in 2003 and 2004.

In 2010, GM sold 372,437 units of the Lincoln Navigator, Toyota Sequoia, Chevrolet Avalanche, GMC Yukon XL and other full-sized SUV and SUTs in the U.S. Analysts believe that volumes have fallen but the segment remains profitable.

Sometime in the past year, industry sources said that GM's full-sized SUVs will be dropped and will be replaced by a vehicle lineup that will be built on GM's front-wheel-drive Lambda platform.

Chevrolet spokesman Mike Albano said that the company will continue to provide a vehicle in this segment for its customers “who need full-sized SUVs for work and play."

Topics: gm, united states

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