GM rolls out updated Camarofor economic comeback plan
Company sees Ford Mustang success as model worth following

Jeff Green
Bloomberg News


Friday, August 11, 2006


General Motors Corp. CEO Rick Wagoner is turning to the Camaro "muscle car" from the automaker's 1960s peak as he tries to end a U.S. market-share slide after a $10.6-billion loss last year.

GM in 2009 will start selling a new version of the Camaro, which it previously built from 1966 to 2002, Wagoner said Thursday in a speech in Traverse City, Michigan. The car will compete with Ford Motor Co.'s Mustang and DaimlerChrysler AG's Dodge Charger and Challenger.

Sales of those rear-wheel-drive cars with engines that exceed 300 horsepower are growing even as gasoline approaches record prices. Wagoner aims to increase revenue from new models after winning union concessions and making other changes that will cut GM's expenses this year at a $9 billion annual rate.

"It makes sense to create a little buzz around the brand and they have the nostalgia factor," said Pete Hastings, a Morgan Keegan & Co. fixed-income analyst. "Toyota and Honda are in a disadvantage in this area because they don't have the history of the 1950s and 1960s fun-to-drive era."

GM, the world's largest automaker, has reported two consecutive quarterly revenue records as it charged more for new models such as the Chevy Tahoe sport-utility vehicle.

The Detroit-based company reported operating profit more than three times analysts' estimates in the second quarter, and its shares have risen 57 per cent this year on optimism the recovery will improve in the second half.

GM reduced its cash burn to $500 million US in the first half of this year from $4.8 billion US in the same period in 2005, Deutsche Bank analyst Rod Lache wrote in a report today.

GM stopped making the Camaro as sales dwindled from a peak of 260,201 in 1978 to 28,404 in 2002. The car made its debut as a 1967 model in late 1966, two years after the Mustang. GM sold 699,000 Camaros in the model's first three years. Wagoner said his first new car was a 1973 Camaro.

The new Camaro will come in six- and eight-cylinder versions and will offer both manual and automatic transmissions, the chief executive said. GM may build 100,000 of the revived models annually and plans to price the car to be a value in the segment, he said. Wagoner declined to give a specific price.

GM Vice Chairman Bob Lutz said in January that the Camaro may be priced slightly higher that the 2006 Pontiac Solstice roadster, which starts at just under $20,000 US. Ford's 2007 Mustang has a base price of $19,995 US, according to the automaker's website.

See CAMARO / E6

Ford in late 2004 began selling the redesigned Mustang with styling reminiscent of the original design. During the years from 1967 through 2002 that the two cars competed, the Camaro outsold the Mustang seven times.

DaimlerChrysler CEO Dieter Zetsche has said repeatedly that the rear-wheel-drive Chrysler 300 and Dodge Charger models helped end the automaker's five-year skid in U.S. market share and return the unit to profit. Chrysler said last month that it will also bring back the Dodge Challenger, another nameplate popular in the 1960s, in 2008.

"The muscle cars of that era connect well with older buyers and attract new buyers, too," said Hastings, who is based in Memphis, Tennessee.

The popularity of more powerful rear-drive cars, which typically are less fuel-efficient than front-drive models of the same size, has grown even as gasoline prices rose to record levels last year. Sales of rear-drive cars with designs influenced by 1960s models, including the Mustang and Charger, rose about 44 percent in 2005, as total U.S. sales increased 0.5 percent.

This year, those models have increased 23 percent as the market fell 5 percent and as U.S. car sales r

 

These cars get the consumer excited and interested in the company which is exactly what they need. They should work on the rest of their cars to be both more fuel efficient and have more performance orientation while the performance image is bringing people back to them.