Tuesday, September 20, 2005

GM stresses fuel efficiency as it introduces new SUV lineup

By Dee-Ann Durbin / Associated Press

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WARREN -- General Motors Corp., in the awkward position of introducing a new lineup of full-size sport utilities as oil prices reach record highs, stressed the vehicles' fuel efficiency during a media preview Tuesday.

"We're very aware of fuel prices and the impact that they have on our business," said Mark LaNeve, GM's vice president of vehicle sales, service and marketing for North America. "We understand this, and we've been committed to fuel efficiency."

GM unveiled the 2007 Chevrolet Tahoe, GMC Yukon/Yukon Denali and Cadillac Escalade, which will be in dealerships in January. Later in 2006, the Chevrolet Suburban and Avalanche and larger versions of the Yukon and Escalade also will be available. The company didn't reveal prices, but the current models start between $35,000 and $51,000.

Some analysts have questioned GM's emphasis on SUVs at a time when gas prices are high and demand for smaller crossovers is growing. Sixty-six percent of GM's new vehicles are trucks, compared to 37 percent for the industry, and GM also is introducing fewer crossover vehicles than average, Merrill Lynch analyst John Casesa said in a recent report.

LaNeve said full-size SUVs aren't likely to see the boom times they saw early this decade, when industrywide sales approached 900,000 a year. GM is expecting 750,000 in sales next year.

But LaNeve said full-size SUVs remain a very important and profitable vehicle in the company's portfolio. Of the 6.5 million full-size SUV owners in the United States, 62 percent own GM vehicles, LaNeve said.

GM said the new, four-wheel-drive Tahoe can achieve an average fuel efficiency of 20.1 miles per gallon, compared to 18.2 for the 2004 Tahoe. That's better than competitors such as the Ford Expedition and Toyota Sequoia, GM said.

"Even before the spike in fuel prices, GM led this segment in fuel economy," LaNeve said.

GM's new SUVs are about 100 pounds heavier than current models, but the company got fuel savings by installing new V-8 engines that shut off half the cylinders when the truck needs less power.

Engineers also made the vehicles more aerodynamic. The windshields tilt at a more dramatic angle and there are smaller gaps between vehicle panels. Even the luggage rack and running boards are shaped differently to improve efficiency.

GM Vice Chairman Bob Lutz said drivers who want even better fuel economy will be able to get hybrid versions of the SUVs in 2007. LaNeve said the company also is considering diesel versions.

LaNeve said vehicles with the 5.3-liter engine also are capable of using ethanol, which is less fuel efficient but cheaper than regular fuel and contains only 15 percent gasoline. GM already has 1.3 million vehicles on the road that can run on ethanol and gas and will produce up to 500,000 more next year, LaNeve said.

LaNeve said GM plans to heavily promote ethanol capability in states with a lot of ethanol fueling stations, including Minnesota and Illinois. It also plans to send letters to owners who may not realize they have ethanol-compatible vehicles.

LaNeve said surveys indicate fuel economy is the most important feature to drivers right now. But GM also has significantly upgraded interiors. GM slimmed down the seats and contoured them to increase leg room. It replaced shaggy ceiling upholstery with smooth fabric and gave individual lines distinct colors and materials, such as metal finish on the console and steering wheel in the GMCs. New options include power liftgates and rear seats that fold up automatically.

The vehicles also have new safety features, including seat belts that tighten if the vehicle is struck from the front, side or rear and standard stability control to prevent rollovers. Side-impact air bags and rearview cameras are optional.

GM shares closed down 23 cents to $31.08 on the New York Stock Exchange.

Dee-Ann Durbin can be reached at ddurbin@ap.org.