General Motors announced late last week that it intends to invest nearly $1 billion to overhaul and redesign its truck line, a move that places a hefty bet on America’s willingness to return to pickups.
During the 1990s, GM trucks were a huge source of profit, a fact that led the company to focus on producing them instead of building more fuel-efficient small cars.
That market, of course, collapsed with the economy, $4 gas, and GM’s bankruptcy. Now that the federal government owns 60 percent of the company, it is demanding that GM invest in small cars like the Cruze and battery cars like the Volt. That’s still happening, and by some miraculous act of the truck gods, GM has found $1 billion to overhaul the ol’ Silverado and Sierra.
Now, some folks out there might be outraged that the General took government money and now appears to be headed right back down the same path that got ’em in trouble in the first place. But I disagree, and think this is a good move on GM’s part. Here’s why:
First of all, I’ve said before that GM makes one heck of a good truck and will probably emerge as a niche automaker making them. Second, when sales numbers of the Silverado and its twin Sierra are combined, they handily beat the Ford F-150‘s sales numbers. The truth of it is, if GM wants to make money and pay the government back, it has to invest in trucks or risk falling way behind Ford and Ram.
Plus, new technology will result in better fuel economy in trucks. Under new federal fuel-economy mandates, GM’s truck lineup must average 24.1 miles per gallon by 2011. GM’s biggest trucks and SUVs won’t reach those numbers, but GM’s smaller, more fuel-efficient models, like the Chevy Traverse, Equinox, and GMC Terrain, will.
Since the last major overhaul of GM’s trucks was in 2006, the time is right to invest in their next generation.
I think American consumers are ready to buy trucks again. Do you?