In an effort to meet consumers’ increasing demand for fuel-efficient vehicles, General Motors (GM) announced it will spend $370 million to construct a new engine factory in Michigan for its electric-powered Chevrolet Volt and Cruze vehicles.
GM’s announcement comes a day after the U.S. House of Representatives approved a massive spending package that would provide $25 billion in low-interest loans to the nation’s struggling auto makers.
While the Treasury Department’s controversial $700 billion economic rescue package would certainly provide direct relief for Detroit’s Big Three -- General Motors, Ford (F) and Chrysler LLC -- it would also put limits on executive pay. According to GM’s Chief Executive Rick Wagoner, the bigger issue is being able to restore a sense of stability in the overall markets.
“Whatever the rules are, I think that’s fine,” Wagoner told FOX Business reporter Jeff Flock in an interview at the company’s plant in Flint, Mich. “I think it’s important to get the markets calmed down.”
Soaring gas prices have dealt a major blow to the auto industry this year, as consumers stray from gas-guzzling SUVs and trucks and look for more fuel-efficient vehicles. Despite a summer of weak sales, Wagoner said the move to build a new factory is important for the future of the auto industry.
“We know we need to keep investing in new technologies, particularly in this case, highly-fuel efficient engines if we’re going to be able to lead the auto industry into this next generation,” he said.
Soaring gas prices have dealt a major blow to the auto industry this year, as consumers stray from gas-guzzling SUVs and trucks and look for more fuel-efficient vehicles. General Motors’ sales suffered through the summer, and Wagoner said things could get worse before they get better.
“I can’t say anybody sees things coming off the bottom,” Wagoner said, citing tough credit conditions and dwindling consumer sentiment. “At this point, I’d like to be able to give you some more upbeat news, but I think we need to recognize that we’re in a tough market here.”
Still, despite the weight of the struggling economy, Wagoner said the move to build a new factory is important for the future of the auto industry.
“We know we need to keep investing in new technologies, particularly in this case, highly-fuel efficient engines if we’re going to be able to lead the auto industry into this next generation.”
GM’s Chevrolet Volt – an extended range electric vehicle that Wagoner aims hopes will hit the market by the end of 2010 – will run 40 miles on battery power and contain a small engine to provide electric power. Wagoner said the vehicle’s ability to run on constant electricity without directly running off the power of the engine brings new technology to the hybrid market.
As far as concerns about the Justice Department investigating General Motors’ credit arm GMAC, Wagoner said he is “not aware of anything along those lines.”
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