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March 3, 2010

GENEVA SHOW: Fuel prices key to small cars in US – Lutz

While marketing the pint-sized Chevrolet Spark in the US demonstrates GM commitment to small cars in the US marketplace, that area of the market remains difficult on pricing and is extremely sensitive to fuel prices, says GM Vice Chairman Bob Lutz.

While marketing the pint-sized Chevrolet Spark in the US demonstrates GM commitment to small cars in the US marketplace, that area of the market remains difficult on pricing and is extremely sensitive to fuel prices, says GM Vice Chairman Bob Lutz.

Speaking to journalists in Geneva, straight talking Lutz referred to US fuel economy legislation and said that the car may have to be ‘priced in such a way that it will sell, so that we can make our fuel economy numbers’.

“As US fuel economy mandates become more and more stringent, that is definitely going to happen with hybrids, where we are going to have to push hybrids into the market whether people want them or not and then recover the price on other vehicles,” Lutz said.

“That is under the proviso that fuel costs remain as low as they are,” he added.

And Lutz sees US fuel prices as key to creating real market demand for small hatchback cars.

“If fuel rises to somewhere near European gasoline prices then I could see a car like the Spark being quite successful in the US market on its own. At a certain fuel price there will be demand-pull for the car. At USD2.50 a gallon people will continue buying full-size pick-up trucks. It’s that simple.”

Lutz said GM wants the Spark in the US to demonstrate commitment to small and ‘environmentally sensible’ cars and to act as a hedge against the possibility of rapidly rising fuel prices.

“The last time that fuel prices went from USD2.00 to USD4.50 we were pretty much caught out,” Lutz admitted.

“We had the Chevy Aveo and Chevy Cobalt but Honda came in with the Fit and Toyota with the Yaris and we were seen by the media as the laggards who simply had not anticipated the obvious sudden doubling of fuel prices which, if we had been as smart as the Japanese, we would have seen that coming.”

Dave Leggett

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