Rear-wheel-drive cars scrapped or moved to Michigan

[mitsubishi]

http://www.globeinvestor.com/servlet...RGM24/GIStory/

GM's move south a blow to Ontario
Rear-wheel-drive cars scrapped or moved to Michigan; company blames new fuel economy rules
GREG KEENAN


00:00 EST Thursday, January 24, 2008

General Motors Corp. has scrapped plans to build some rear-wheel-drive cars at its giant operations in Oshawa, Ont., a move that could threaten the long-term future of the largest vehicle assembly plant in Canada and thousands of jobs.

The auto maker has scuttled the rear-wheel-drive version of the Chevrolet Impala, which was scheduled to represent half the output of a leading-edge flexible assembly plant now under construction in Oshawa, industry sources said.

Production of rear-wheel-drive Cadillac and Buick sedans originally slated for Oshawa will be shifted instead to Lansing, Mich., the sources added.

GM will begin producing the reborn Chevrolet Camaro as a rear-wheel-drive muscle car in Oshawa later this year.

The move comes as GM prepares for crucial contract talks with the Canadian Auto Workers union this summer and seeks government financial help for an investment in St. Catharines, Ont., on top of $435-million Ottawa and Ontario have already agreed to give the company as part of a $2.5-billion plan to upgrade its Canadian operations.

Much of the $2.5-billion will be spent consolidating two Oshawa car plants into one flexible plant that will turn out the Camaro.

The two plants assembled 470,016 cars last year.

The next-generation Impala was designed to be heavier and larger than the existing front-wheel-drive version and would have been based on the same platform or basic underbody as the Camaro - GM's Zeta program.

The new plant would have cranked out a combined 500,000 Camaro, Impala, Buick Lucerne and Cadillac DTS cars.

The heavier Impala has been doomed by new U.S. fuel economy rules requiring auto makers to reach an average of 35 miles per gallon by 2020, industry and union sources said.

The new rules mean "some of those [vehicles] have been stricken from the future product program," GM vice-chairman Bob Lutz acknowledged in Detroit last week when asked how the regulations would affect the Zeta cars. Mr. Lutz did not elaborate on which models were cancelled.

[zete]

This makes zero sense. Moving it doesn't affect CAFE in any way at all.

And, why would they screw around with their highest quality plant? Sounds fishy. Something else is up methinks. They're probably looking for money from the feds or something.

[igor]

Why is GM the only company (maybe one of two with Chrysler) freaking out over CAFE ?

Regardless of CAFE - Did Lutz not have a plan for increasing fuel prices? Gas will probably be stable at $4 by years end .. regardless of CAFE.

I do not understand how a rule that will go into effect in 2020 affects models that will be long gone by then. How this affects low volume high-prestige cars like Corvette, Cadillacs, or the Impala. I do not see how there has not been a single mention in change of plan for Trucks and SUV's ( the biggest "down force" on GM's CAFE), Lambdas. I do not see how there has not been any notion of move to improve the lackluster fuel economy of GM's compacts and subcompacts.

I do not see how this all is a result of CAFE. If you ask me Lutz is playing politics - Are they bitching and moaning so people feel sympathetic with them?, so CAW caves in and gives them a good contract?, so government bails them out? I do not understand how Lutz could have not had a contingency plan for this - heck I cannot see how the new CAFE can be a reason for ANY product plan cancellations AT ALL in a well run automaker. At most this should spruce up engine development, and long term planning for lighter architectures. PERIOD. CAFE is truly an opportunity -everyone will be forced to offer more expensive engines in their cars - allowing the big three to bring them over as well - small diesels, small gasoline turbos, small hybrids, other advanced engines.

I have been a great Bob Lutz fan, but right now he just looks like a sleazy car salesman, the worst kind of politician, or a clueless manager running around like a chicken without a head.

Igor

[zete]

Igor makes excellent points. Lutz's latest makes no sense. Sure, it affects the Impala after the one due in a year and a bit. But it can't affect the one currently planned. That makes zero sense.

[jasaero]

First off, this does NOT happen in 2020. The new rules start in 2012. That is about the time products still is pretty early stages would hit. 2010-12 are probably the ONLY products that can be stopped now and revised or rethought to help with the new rules in 2012. The rules for 2012 are not even known yet, other than it is known car and truck CAFE number will be lumped together for 2012. What the new combined CAFE number for 2012 is will NOT be known until sometime next year.

I am sure lots of companies are freaking about this, they are just keeping quiet about how they plan to adapt to it. Probably once the finalized rules are out next year everyone will start explaining what sorta product changes you can expect. I think GM is just trying to be open about the problems associated with adjusting for this when they only have a 4 year time frame to adjust and only 3 years of time or LESS between when the rules are finalized and when they start getting inforced. GM has a 60/40 mix of cars and trucks and just wants to make sure their average of all of them is pretty respectable come 2012 incase the rule change isn't friendly to companies selling way more trucks than cars. The 2012 number might be really fair and easy to comply too and only get tough as it ramps up from year to year or however it gets worked out to ramp the number from 2012 to 2020. Also not complying in the 2012-2020 time frame may also still cause large fines. Whether those fines are small in understanding of the complexity of this change or just as harsh as not complying today is not known.

GM is just doing whatever it takes to make sure they don't the worse of the rule change if it isn't friendly to truck oriented companies. They want their cars to be able to compensate for their trucks since trucks people will actually want are going to need to be pretty similar to those that exist today. Nobody is going to buy a V6 full size truck just because CAFE makes the V8 need to be a hybrid for a company to hit the average. So companies selling mostly trucks are going to have to have some VERY efficient cars and if MOST of their cars are large cars there is a chance the 2012 number could screw them over.

[doh]

http://www.ctv.ca/servlet/ArticleNew...hub=TopStories

Updated Thu. Jan. 24 2008 10:24 AM ET

toronto.ctv.ca

Canadian Auto Workers president Buzz Hargrove says he is concerned about a report that General Motors has scrapped plans to build some rear-wheel-drive cars at its giant plant in Oshawa, Ont.

Such a move could threaten thousands of jobs and the long-term future of the largest vehicle assembly plant in Canada, industry sources told The Globe and Mail.

The sources said the automaker has decided to axe production of the rear-wheel-drive version of the Chevrolet Impala, which was scheduled to represent half the output of a leading-edge flexible assembly plant now under construction in Oshawa.

Production of rear-wheel-drive Cadillac and Buick sedans originally slated for Oshawa will now be shifted instead to Lansing, Mich., the sources added.

Hargrove says he hasn't yet received any official confirmation of any revised plan.

"If General Motors has made a decision not to build rear-wheel-drive vehicles in Oshawa, they haven't informed us," Hargrove told CTV.ca on Thursday.

"Would we would be surprised if the move was made now? No, given the new (fuel economy) law in the United States."

Hargrove says the new U.S. legislation requires automakers to build vehicles that reach an average of 35 miles per gallon (6.7 litres per 100 kilometres) by 2020.

He added details of the proposed Cadillac and Buick productions had not yet been finalized.

While Hargrove said he was concerned about the report, he remains optimistic that new work will retain jobs.

"There's an obligation on the part of General Motors to put new product in there," he said. "What that will be, we don't know."

Hargrove said GM has injected $2.5 billion into the Oshawa plant for new production. The Ontario government has given $235 million for the cause, while the federal government under Paul Martin handed over $200 million when the Beacon project was announced in 2005

[Joevette]

$4 gas would make it cost $50 dollars to fill up my Civic, just to go around 300+ miles... that is just like being raped at the pump, i can only imagine what others have to pay. I'll go to e-85 as long as its like prices of old

[jkennedy293]

Originally Posted by igor

I do not understand how a rule that will go into effect in 2020 affects models that will be long gone by then.

The new CAFE regs are actually being phased in with increasing milestones every year. I believe in 2012, there will be a bump up from the current 26.5mpg to 29mpg. In 2016 the bump will be to 32mpg.

This is why Lutz is being loud. He knows that more than 50% of GMs sales will be light trucks or SUVs. Even the CUVs don't that great of gas mileage. So, they have to hypermile the other vehicles to make up for the woefully performing big trucks.

That being said, I think Lutz is blowing smoke up the CAW's collective arse. I think he is using the cancellation of the Impala, and thus the limited use of Oshawa, to get a better deal from the union. I wouldn't be the least bit surprised to hear Bob-o-rino announce that the RWD Impala is back on the drawing board once the they have the new contract. The new Ultra V8 may live again as well.

[New_Mexico_Sunset_on_Rt66]

As I posted earlier. Oshawa is their highest quality plant. They have invested millions to tool it up to get ready for the Zetas. The G8 will get shifted there. I think many Americans would be fine with paying the "CAFE penalty".

I guess many European companies already do that. I dunno, my 3600lb '02 Z28 got about 28 mpg. So with the fine being $5.50 for every 0.1 mpg that adds $2500 to the price of the car in 2020. That's 12 years out. I think consumers would just go ahead and pay the CAFE penalty, to have a fun car.

And I'll just toss this out. The current standard is 27.5 mpg. GM does not currently pay any penalty. My C5 Z06 comes in at, ... you got it, .... 28 mpg. that's just oer the 27.5 mpg. So it seems to me GM milked just enough mpg from the LS6 engine without sacrificing HP and torque. Could they milk another few mpg out of the LSx engine? Possibly? But I also think consumers would be fine in paying the couple thousand dollar penalty. And the full 35 mpg does not take affect until 2020. I'm sure it will be a curve to go from 27.5 to 35.

I think consumers would just as soon pay the "CAFE penalty". The Europeans already tack it on the sticker.

[megeebee]

Moving RWD sedans for Buick and Cadillac to Lansing???

Which plant?

Grand River? If so, could that plant be modified to build Zeta along side Sigma II ?

[wescoent]

So, as I am to understand it, this means the DTS/STS replacement (XLS?) and Lucerne/Park Avenue will be built at the current Cadillac facility (STS, CTS, SRX)? Perhaps GM is going to use some Zeta parts for Sigma II?

So, with the G8 staying in Australia, and no Buick or Cadillac Zeta models, GM seriously thinks Camaro volume is going to fill Oshawa?

Secondly, where exactly is Impala and Lacrosse production going to go?

[zete]

Originally Posted by megeebee

Moving RWD sedans for Buick and Cadillac to Lansing???

Which plant?

Grand River? If so, could that plant be modified to build Zeta along side Sigma II ?

And why would GM spend the money twice: once already at Oshawa and again at someplace in Michigan. It makes no sense. Why waste money that way.

It's all just a ploy.

And as I showed in another thread, the heavier CTS gets the same mileage with the 3.6l that the lighter 2008 Malibu gets. So it's not a RWD thing, it's a smoke and mirrors thing.

Overall, I think what has them is that they don't know if they can improve mileage enough to meet the new CAFE requirements. A gas tax is the optimal solution as it'll force consumers to look at more fuel efficient solutions. CAFE simply punishes automakers with a significant mix of large cars.

[zete]

And therein lies the issue. GM dumped billions into that plant. They don't have billions to go move it around. So it's just posturing.

[Tone]

Interesting ... there is a lot of politicing up here (Ontario, Canada) that the federal government isn't doing enough to help manufacturing in Ontario, which has taken a huge hit with the appreciation of the Canadian dollar.

Our dollar has risen from around 85 cents US to over a dollar US in a little over a year. This has been chaotic for export-oriented manufacturers .. and I suspected it might impact the status of Zeta in Oshawa as I'm guessing it hugely impacts the business case for building cars there.

Our provincial government (and manufacturers) are lobbying our federal government for some assistance ... and they are not getting anywhere. I suspect this is part of the pressure being applied to get some fed money flowing to Ontario manufacturing. Some tax breaks, subsidies, etc would obviously help GM offset the high dollar and make Oshawa more viable.

Given the money they've already invested ... I suspect they (GM) is very motivated to make something work in the Oshawa plant. And, just because Zeta Impala is cancelled (or on hold) doesn't mean that GM won't continue to build some kind of Impala (FWD?) in Oshawa.

The real worry for enthusiasts is if the Camaro is the only Zeta car in Oshawa. If that's true and second and third year volume drops off, it could really hurt the viability of the car. So, either G8 production moves to Oshawa, Camaro production moves to Lansing or Oshawa is flexible enough to produce Camaros and an unrelated product in the same factory ... as Ford does with Mustangs and Mazda6s in Flat Rock.

[61BelAir]

That sucks, I guess I won't be getting a new Impala to put in my garage!