Camaro Goes Hybrid, As GM Axes Rear-Drive Impala, LaCrosse?

February 3, 2008

General Motors has been forced to rework the investment case for the Chevrolet Camaro in the wake of new fuel-economy rules adopted this past December.

The Camaro will still be built, but higher-end V-8 versions likely will be priced higher than expected. As for other planned GM rear-drivers--a new Chevrolet Impala, Buick LaCrosse and the replacement for the Pontiac G8 due this spring--all have been dropped along with a new V-8 engine GM was contemplating building.

"You can't kill something that was never approved," said one GM official, who asked for anonymity but who confirmed the rear-wheel-drive projects are now dead.

Stew Low, a spokesman for GM of Canada, said the Camaro project is safe and is moving forward. The GM of Canada plant in Oshawa, Ontario outside of Toronto should be ready to build the first Camaro late this year, Low said.

Buzz Hargrove, president of the Canadian Auto Workers union, said that GM is spending $2.5 billion in Oshawa - including $435 million from the Ontario and Canadian federal governments.

“We anticipated that would be followed by other rear-wheel-drive vehicles, but the money they spent on the plant makes it a flex plant, so you can build both front-drive and rear-wheel-drive in the facility,'' Hargrove told reporters in Canada.

Only a proposal for new ultra-luxury rear-wheel-drive Cadillac seems to still have a chance of making it through GM's product development process and into production. Even that project, though, may well depend on how the Environmental Protection Agency writes the rules enforcing the new fuel-economy standards.

The death of the other rear-drive GM vehicles also has implications for the final pricing of the Camaro when it goes on sale next year.

Last year, GM vice chairman Robert Lutz had told TheCarConnection.com that the rear-wheel-drive platform developed for the Camaro would support other vehicles as part of GM's effort to make the project financially manageable. Spinning more vehicles from one platform spreads the costs around and is the most efficient and effective way for GM to use its available capital, Lutz has said.

As part of global product strategy GM plans to use fewer but more flexible platforms that would accommodate a wider range of vehicles and vehicle designs. Specifically, the new Camaro platform could be used for other rear-drive vehicles, Lutz said he said before the fuel-economy debate had heated up in Congress.

Part of the reason for the delay in moving forward with the Camaro project revolved around extending the utility of the fundamental architecture so it could serve as the platform for other vehicles as well, he said.

The new fuel-economy rules, however, have basically forced GM to reconsider its extensive plans for rear-wheel-drive vehicles. Rear-wheel-drive trucks and SUVs are safe for now because the new federal rules will allow some wiggle room for trucks. GM, though, is not in a position to absorb the roughly 1-mpg fuel-economy penalty that comes with building rear-wheel-drive passenger cars, GM insiders said in the wake of the North American International Auto Show in Detroit.

However, GM's decision to scrap the other rear-drive models is putting an enormous cost burden on the new Camaro.

GM officials are saying they should be able to recover some of the investment costs in the new rear-wheel-drive platform by selling the vehicles in places such as Australia, the Middle East and China. Australia, however, has a new government that takes global warming very seriously. China is imposing new fuel-economy standards that are as tough as those found in the United States and one of the largest vehicle markets in the Middle East, Iran, is off limits to American car companies.

Nevertheless, GM desperately wants to price the new Camaro competitively against vehicles like the new Dodge Challenger and particularly the Ford Mustang, which pretty much inherited the segment after GM withdrew the Camaro earlier in the decade.

With a new generation of rear-wheel-drive vehicles consigned to the never-built file somewhere in the company's engineering office, GM now is working on a plan B for Camaro.

GM chairman Richard Wagoner has already confirmed a V-6 engine will be part of the Camaro package.

While the concept Camaro has come with V-8 engine, a V-6 would serve as basic engine for the production Camaro and would help keep prices competitive.

Meanwhile, Tom Stephens, the head of GM's Powertrain Group, told reporters recently that turbocharging can help boost both fuel economy and horsepower.

The V-8 version of the Camaro is very likely carry a substantial premium and GM is thought to have assigned a team of engineers to work out how to apply its new dual-mode hybrid system for an even more expensive version of the Camaro.--By Joseph Szczesny

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