Steane Klose | Jun 4, 2008

It’s a bit like the 70’s oil crisis all over again for GM. Having just announced the scrapping of one large-car RWD project, a casualty of new CAFE laws coming into effect in the U.S. comes the news overnight that a large part of the SUV range is under review, including the Hummer brand as a whole.

GM is looking to smaller cars to deal with the tougher fuel economy standards required by law, a move that they admit is also influenced by the growing demand for smaller more fuel efficient models.

Rick Wagoner, GM chairman and CEO announced overnight a raft of changes to the General’s line-up in the coming years. The Chevy Volt is confirmed for production and no-doubt GM are pinning their hopes on this new petrol-electric hybrid that will have the capability to handle average daily commutes running on electrical power alone.

"We intend to show a production version of the Chevy Volt publicly in the very near future, and we remain focused on our target of getting the Volt into Chevrolet showrooms by the end of 2010," Wagoner said.

On the way out the door are some of the mainstays of the current SUV line-up, including the Chevrolet Silverado and GMC Sierra. Currently built in Canada, production of both models will cease during 2009.

By 2010, production of the Saab 9-7x, Chevrolet Trailblazer and GMC Envoy will also end.

The shock announcement is that GM are undertaking a strategic review of the Hummer brand to determine its fit within the GM portfolio. At this point, the company is considering all options, from a complete revamp of the product lineup to a partial or complete sale of the brand.

"We are making a number of important announcements today, covering everything from product and technology investments to capacity adjustments to a strategic review of our Hummer brand," said Wagoner.

As the General’s SUV’s drop like flies in the face of rising oil prices, the future will be fuel efficient compact cars (still sounds like the 70’s doesn’t it…). To this end the GM board has approved the development of a new Chevy compact that will be designed to set quality and safety benchmarks for the compact class. Production is likely to begin in mid-2010 at GM's Lordstown, Ohio, plant.

"This car will represent the first U.S. application of our global architecture strategy," said Wagoner.

This strategy will pay major dividends as we leverage our extensive car product development capability in Europe, Korea, and other locations to accelerate the shift in our U.S. product portfolio," said Wagoner.

The next-generation compact will feature the 1.4-liter turbocharged version of GM's global four-cylinder engine. With this engine and a manual transmission, the new Chevy is expected to achieve a 9mpg improvement over Chevy's current entry in this segment.

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