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The Honolulu Advertiser
Posted on: Wednesday, January 10, 2007

Analysts impressed with new lineup at GM

By Bush Bernard
The Tennessean

Rick Wagoner, GM chairman and CEO, right, and Robert Lutz, vice chairman, introduced the Chevrolet Volt concept car at the North American International Auto Show in Detroit on Sunday.

PAUL SANCYA | Associated Press

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DETROIT — New vehicles and a focus on technology have helped General Motors Corp. improve its image with analysts and the press during this week's North American International Auto Show.

The company introduced its new version of the Cadillac CTS on Monday and showed off its new version of the Malibu yesterday.

But it's the Chevrolet Volt, an electric concept car the company rolled out on Sunday that has sparked the most talk, with some analysts even suggesting that the carmaker's lineup of new products is fueling a turnaround for the financially troubled U.S. carmaker.

"I think that's the most technological significant thing I've seen at this show or the L.A. show," said Jim Hossack, an analyst with AutoPacific in Tustin, Calif., of the Volt.

GM has beefed up its product lineup in the past two years. Its new design for the Suburban garnered Truck of the Year honors at this year's Detroit auto show. The new Saturn Aura captured Car of the Year honors.

The new car lineup is "potent," said Jim Sanfilippo, an analyst with Automotive Marketing Consultants Inc.

"They have a long way to go," Sanfilippo said. "But they're beginning to show proof that products are driving their strategy."

Part of the change people are seeing with GM comes from actions taken last year, said David Cole, chairman of the Center for Automotive Research, an Ann Arbor, Mich., think tank.

By restructuring healthcare costs in its deal with the United Auto Workers and eliminating about a third of its workforce while it shutters plants, GM has shaved about $2,000 off the overhead it needs to build each vehicle, Cole said.

"You just don't see that kind of thing happening," Cole said. "Usually you see it in nickels and dimes. To take that much out in one year is truly remarkable."

GM, whose turnaround is still in its infancy, still has to deal with shrinking sales volumes and other challenges, such as reworking a labor agreement that's set to expire this year.

But, Cole said, the company has made progress similar to that made by Carlos Ghosn when he took over as the head of Nissan almost eight years ago, when Nissan was teetering on the brink of bankruptcy.

"When you looked at it from the outside, you saw a real problem," Cole said of Nissan before its successful revitalization efforts. "When you looked at it from the inside, you saw a very competent operating company that had some individual problems with excess capacity and some problems in the (supplier base) that had to be dealt with."

Nissan closed several plants in Japan and severed its direct financial ties with most of its suppliers, which was a predicate to its successful revival.

"When they dealt with them, all of a sudden it was a different thing and things turned around very quickly," Cole said. "The same thing seems to be happening (with GM)."

Hossack said the Volt is an example of what GM can achieve with technology when it puts its mind to it.

The Volt can go short distances as an electric car and can use a variety of different fuels, including gasoline, diesel, biodiesel and ethanol. The company can make the vehicle for several markets, tailoring it to local needs, Hossack said.

"You could run it off of ethanol in Brazil," he said. "In Europe, you can run on biodiesel. In the U.S., diesel, E85 or gasoline. You could have them in China running on hydrogen fuel cells."

The buzz created with its debut has helped push GM back into the technological limelight just a few years after its effort with an electric car failed, Hossack noted. While GM's EV1 proved unfeasible, Toyota's effort with the Prius hybrid vaulted Toyota ahead in the minds of many consumers.

"I think from a (public relations) sense, they learned from Toyota that it's really important not only to be on the leading front, but to appear to be on the leading edge," Hossack said. "Today, (GM) appears to be on the leading edge."