BRESCIA, Italy -- Reflecting the demand of increasingly affluent American consumers, General Motors Corp. is planning to emphasize production of large vehicles such as pickup trucks and sport-utility vehicles in the coming years, according to top company executives.
In a frank discussion of their business plans at a strategy meeting here, GM officials painted a bleak picture for small car sales in the United States and said the company will emphasize luxury and high-performance specialty cars, while offering small, economical automobiles as loss leaders.
''Large trucks, by far, are our biggest profit makers in the United States,'' said Ronald L. Zarrella, president of GM North America. As a result, he said, future ''GM North America product launches are truck-focused.''
That comment brought tough questions from some auto industry analysts attending the usually closed GM Strategy Board meeting. They wondered, for example, what GM would do if the U.S. government toughens truck fuel economy and emissions standards, which are now lower than those for cars. The analysts also expressed concerns about the effect of fuel price increases on the strategy of emphasizing trucks.
Zarrella said GM would take whatever steps are necessary to keep trucks at the fore in the United States, ''because most of GM's market-share loss in the United States, by far, has been in entry-level cars.''
GM holds a 28 percent share of the U.S. auto market, still the largest for any company doing business in America. But that share is down from 50.2 percent in the early 1960s.
The need for a new focus is partly due to a change in demographics. In the past, GM's strategists targeted entry-level vehicles -- inexpensive small cars such as the Chevrolet Cavalier -- at young buyers with little money, said Don Hackworth, the executive in charge of manufacturing for the GM's North America Car Group.
''The idea was to get them into the market,'' Hackworth said. More expensive models, such as Cadillac cars or expensive Chevrolet Suburban sport-utility vehicles, were aimed at older, presumably more affluent, buyers.
''But now, all of that has changed,'' said Hackworth. ''A lot of rich people today are under 25. They don't look at money the same way we did. They expect to make millions.''
As the tastes and demands of new buyers have shifted, GM's share of the under-25 (age group) market has declined 10 percent, he said. The whole meaning of ''entry level'' buyers has changed, he said. ''They don't want the Cavalier. They want the Tahoe or the Escalade,'' pricey GM sport-utility models.
That means in 2001, GM will increase production of the more profitable, larger vehicles and decrease that of the less profitable cars. GM will stick to that strategy even if, as many analysts predict, there is a downturn next year in the U.S. auto market.
''History shows us that car sales decline more rapidly than truck sales in that kind of market,'' Zarrella said. ''We lose money on small cars.''
Partly out of necessity, GM will keep small cars in production. ''Many first-time buyers, especially women and minorities, rely on those models,'' he said.
GM also relies on small cars to help it stay out of trouble with the U.S. government because they help to increase the average fleet fuel economy for all cars sold in the United States. That reduces the possibility of heavy financial penalties for violating federal fuel economy laws.
''We're going to stay in small cars; we just have to find a way of doing it more profitably,'' Zarrella said. GM will attempt to do that by going to ''world-platform engineering,'' using one vehicle structure to produce several different models for global sales.
Brainerd Dispatch ©2013. All Rights Reserved.