With GM Cutting Cars, Is Corvette Next?

May 12, 2009

Here's an easy way to set off a firestorm ... get people frightened that GM is going to kill the Corvette. We're not doing that here, but rumors persist.The reality is that the Corvette is one of GM's most valuable brands, and that the car isn't going out of production, regardless of whether Nancy Pelosi thinks the Corvette is worth of life or not. According to GM CEO Fritz Henderson, the Corvette also makes money. In a recent public web cast, Henderson reiterated a phrase GM has used recently in defending the Corvette's business case against potential attention from Treasury Department pencil-pushers, insisting the low-volume two-seater "pays the rent in terms of profitability and cash flow."

Treasury Department officials certainly have little understanding of the Corvette's important halo effect for GM, given that the IRS is the Treasury's equivalent brand.

The denials about the Corvette's demise are supported by others contacted by TCC, including several Team Corvette members who wished to remain anonymous. Said one, "If you look at sports car sales in the U.S., you will find that Corvette leads the top ten list in that market segment." Even bureaucrats can understand Top Ten lists (doesn't everyone watch Letterman?)Enthusiasts, however, still have reason to be concerned. Last year GM closed their  High Performance Vehicle division. Two relatively high-visibility products from HPV included the HHR-SS and the Trail Blazer SS. More recently, GM announced the end of production for the Cobalt SS, the Pontiac G8, and the Cadillac STS-V.

Because our current government feels that it has the legal right to pick winners and losers in the market (and to void contracts and agreements at their whim), the Corvette's future may not be as secure as Fritz claims.See this story from Edmunds Inside Line for additional details from Henderson's web cast.

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