After a long lull in sales, General Motors Co. announced that it will be spending a huge amount to remodel its full-size pickups. GM is in high hopes that consumers and businesses will resume buying trucks. GM product chief Tom Stephens said that Chairman and Chief Executive Edward E. Whitacre Jr. has agreed to fund the move. A source said that this will cost the company nearly $1 billion.
GM had put off redesigning the trucks because its financial struggles especially that it faced a government-backed bankruptcy reorganization last year.
A major portion of GM's revenue and operating profit come from full-size pickups such as the Chevrolet Silverado. GM will revitalize its pickup lineup but at the same time, it will invest heavily in small, fuel-efficient cars as well as in the electric Chevrolet Volt due later this year.
At the Detroit Auto Show, GM displayed its new Chevy Cruze, which it hopes will be its first strong contender in compact cars in decades. In the past two years, truck sales had plunged after gasoline spiked to $4 a gallon in 2008 and home sales by contractors and builders had collapsed amid the recession.
GM is now trying to boost revenue and return to profitability in a bid to repay the $6.7 billion in cash it owes the US government. In addition, the Treasury Department invested about $50 billion more in GM that was converted into a 60% stake in the automaker.
The Obama government has been encouraging GM, Chrysler LLC and other automakers to produce smaller, more fuel-efficient vehicles, including battery-powered cars.
When asked for a reaction on GM's decision to invest in trucks, administration officials said that it's the company's own business, and that neither the Treasury nor the White House was involved. [via autonews]