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GM Aims High-Mileage Cruze At U.S. Market

Automaker hopes to cruise to profitability with fuel-stingy compact

By Joe Benton
ConsumerAffairs.com

August 22, 2008
General Motors is losing money but says it's prepared to invest more than a half a billion dollars in an Ohio plant that it believes will help consumers and secure the company's future.

The plant will build a high-mileage compact, the Chevrolet Cruze, which will roll out next year in many European and Asian markets.

The investment in the Lordstown, Ohio is one of several that have been announced at U.S. plants in the past five years, adding up to over $2 billion total investment in Ohio and more than $20 billion in the U.S., according to GM.

The gamble had better pay off. GM and other U.S. automakers reported enormous sales declines in July that were much worse than expected.

GM car and light truck sales fell a whopping 26 percent. Sales of light trucks and SUVs at GM dropped 35 percent.

GM earlier reported a $15.5 billion quarterly loss, in large part because of plummeting sales and prices for SUVs.

"The Cruze will build on the already successful Chevrolet Cobalt, Cobalt XFE and Cobalt SS, all of which are nearly sold out in dealer showrooms," said Ed Peper, GMNA vice president of Chevrolet. "Our dealers are asking for many more Cobalts than we can build."

GM says Chevrolet Cobalt sales are up 16 percent, year-to-date through July 2008, with an impressive 33 miles-per-gallonhighway. The new Cobalt XFE model jumps to 37 miles-per-gallon and is selling almost as soon as it's unloaded from the delivery trucks to dealerships.

GM has high hopes for the Cruze, believing its estimated 40 MPG fuel economy will draw back the drivers its lost as gasoline prices surged to $4 a gallon. The Chevy Cruze will be officially unveiled at the Paris Motor Show in October.

"One of the key reasons for the success of the Chevrolet Cobalt and Pontiac G5 is the Lordstown workforce and the strong partnerships with the UAW and local and state officials," said GM CEO Rick Wagoner. "Based on the quality of work and these strong partnerships, we are pleased to announce our plans to invest another $500 million in the Chevy Cruze product program in the U.S., including more than $350 million in Lordstown."

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