According to the Wall Street Journal, GM is planning a major product investment in its smaller cars to shore up its bottom line. The report says that GM plans to spend almost $2 billion overhauling its small car offerings. The move will be seen as an attempt to improve its position in a segment of the market that has been overlooked by Detroit over the past five years, as GM has preferred to rake in profits on high margin SUVs and light trucks.
The WSJ report says that GM plans to bring out a string of new or reconfigured compact cars and trucks over the next few years. The report adds that GM believes that the smartly designed new models will boost its market share among cash-strapped younger buyers.
WSJ reckons that GM’s entry level models have been generating losses as high as $1 billion a year in recent years and that they have been losing out to European and Asian competition.
The report also points out that GM needs small vehicles because of the part they play in the government’s CAFÉ calculations.
GM is expected to use models from its Daewoo Motor (GMDAT) operation to bolster its small cars offering, with GMDAT cars being sold under the Chevrolet and Suzuki brands.
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