GM pitches new product strategy to sceptical investors

Detroit: General Motors (GM) executives used to boast about how frequently the company redesigned cars and trucks. Now, the automaker wants to double the lifespan of vehicle platforms as part of a broader effort to slash and redirect capital spending, GM executives said.
Starting with the new Chevrolet Cruze compact, the basic underpinnings of vehicle lines could last a dozen years or more, General Motors president Dan Ammann said.
The move underscores the balancing act the automaker faces in tackling conflicting challenges as the growth of auto sales in the United States and China slows. GM and its rivals face increasing pressure to prove they can keep core product lines fresh, meet stricter emissions and safety standards, and forge a future in ride-sharing and autonomous vehicles — all while returning more cash to shareholders.
Over the next several years, the company will undertake the most extensive overhaul of its vehicle development process in decades, GM executives said. The goal is to design its global fleet of vehicles with just a few basic building blocks, spreading the engineering and research costs for a given lineup of cars and sports utility vehicles (SUVs) over millions more vehicles.
A single platform, underpinning multiple models, might stay largely same for more than a decade, GM executives said. Global product development chief Mark Reuss said the company aims for up to 2.5 million sales a year from a variety of models built on the same platform as the Cruze compact, including the mechanically similar European Opel Astra.
Exterior styling will change more often, with updates of sheet metal or plastic skins — so-called ‘top hats’ in GM parlance. The automaker also plans to freshen electronic features with software updates delivered over the internet. The move to fewer and long-lasting platforms poses multiple risks.
GM could end up with platforms that are technologically outdated, analysts cautioned, or not appealing to diverse customers in different global markets. Further, most of GM's rivals are also moving to slash the number of different vehicle platforms they use. "The advantage could be short-lived," said Jeff Schuster, senior vice president at LMC Automotive, a forecasting company.
Shifting spending
Making the company leaner will also require increased spending in the short term. GM said it plans to initially increase capital spending to about $9 billion a year through 2019, up from $7 billion a year in 2014. For the period 2016 through 2019, capital spending will rise to between 5 percent and 5.5 percent of revenue, up from 4.4 percent in 2014.
GM earlier this month invested $500 million in ride-hailing company Lyft, and last week it said it was launching car-sharing ventures under the new brand, Maven. On Thursday, GM grouped all its autonomous and electric vehicle engineering under one executive in a move to speed development of those technologies.