Gm May Sell Medium-duty Truck Business

by : Mike Bartley



General Motors Corp. may sell its medium-duty truck business as it concentrates on making a profit from building cars and light trucks. "We are considering options for our medium-duty truck business to better position the unit for growth," GM spokeswoman Melisa Tezanos said Wednesday. She wouldn't comment on potential purchasers. The largest American automaker does not break out the unit's financial results.

In 2006, the unit manufactured about 40,800 Chevrolet Kodiak, GMC TopKick and Isuzu T-Series models. These vehicles are primarily used as dump trucks and delivery vehicles. Additionally, the Flint Journal reported this week that Navistar International Corp. may be interested in the Flint-based unit. The latter employs about 500 people. Roy Wiley, a spokesman for Warrenville, Ill.-based Navistar, declined to comment.

"This deal makes so much sense, I hope it gets done," Bear Stearns analyst Peter Nesvold said Wednesday. Nesvold estimated that the medium-duty truck business has annual revenue of about $2 billion and is worth $450 million to $500 million.

If Navistar were the buyer, the new production could add 50 cents to $1 a share to that company's earnings, wrote Nesvold in a report Tuesday. Nesvold, who is based in New York, rates GM shares "outperform" and Navistar shares "peer perform."

Still recuperating...
The Detroit automaker has sold over $16 billion in assets in the past couple of years to pay operating costs as it posted net losses of $12.4 billion. Chief Financial Officer Fritz Henderson said April that GM is still reviewing options for assets, including the Allison Transmission unit in Indianapolis, which are outside its main automotive operations.

To stress, the Detroit automaker is currently under pressure to boost sales of cars and light trucks in the United States after Toyota Motor Corp. outsold GM worldwide last quarter for the first time ever. The automaker needs the help of to sift the mismanagement

This year, GM announced its target global sales of 9.2 million cars and trucks, while Toyota expects to sell 9.34 million. GM's asset sales include 51 percent of its finance unit to a group led by Cerberus Capital Management LP, increasing $13 billion over three years, and stakes in Suzuki Motor Corp., Isuzu Motors Ltd. and Fuji Heavy Industries Ltd., creeping up $3 billion.

GM's cash, marketable securities and funds available from a retiree health care fund plummet to $24.7 billion at the end of March from $26.4 billion at the end of December as the automaker made a $1 billion payout to GMAC and another $1 billion for a convertible bond payment.

On producing commercial fuel cell vehicles
GM announced its plan to manufacture commercial fuel vehicle like the Volt in a span of four years.

Larry Burns, GM's vice president for research and development, said the next step is to continue work on production engineering of the Chevrolet Volt fuel cell E-flex system, which contains the same basic fuel cell, battery and electric drive combination as the Sequel.

The decision to go ahead with production engineering of the Volt -- with a plug-in, gasoline engine version as well as the fuel cell variant -- was recently firmed up."We are now entering into a mainstream vehicle production process that typically lasts three to four years," Burns added. "We are no longer in the skunkworks stage."

"What makes this different is we're on real roads with real speeds," Burns noted. "We've taken the world's most technologically advanced vehicle on a 300-mile road trip to show we've overcome a big hurdle toward commercializing our fuel cell vehicles -- achieving the driving range expected by today's consumers.

He added, "Sequel and GM's other fuel cell vehicles address these very real concerns pointing the way to a new energy future a future in which hydrogen is a common energy currency for our vehicles in which hydrogen and electricity become interchangeable energy carriers in which both are created from diverse, and largely renewable, energy resources."

End of Sequel
In the New York test, the automaker put its two existing Sequel development vehicles on a cross-country run that included numerous hills and temperatures in the mid-80s. Notwithstanding the challenges, both vehicles completed the run with only a few precautionary stops to check on temporary fault readings from sub-systems. The vehicles each used less than seven kilograms of compressed hydrogen and averaged an equivalent of 43 mpg, impressive for large bodied SUV-style vehicles that weigh 5300 pounds.

However, the Sequel has no plug-in feature and can only drive for a few miles on stored energy once the hydrogen tanks are empty. The test vehicles also carry a host of technologies, such as steer-and brake-by-wire controls instead of standard hydraulics, wheel hub motors and a lighter weight aluminum structure.

Many of the same engineers and technicians who developed the Sequel are now on the Volt team. The Sequel gets a power boost with the help of a pack of lithium-ion batteries, the same as those found in computers and cell phones.

Engineers behind the Sequel said they have managed a 30 percent increase in energy efficiency since September. Chris Borroni-Bird, GM's director of advanced technology vehicle concepts, said the Sequel will be indicative of future automobiles, which will benefit from advancements in electronics rather than mechanics. "We haven't changed any of the hardware (since September)," Borroni-Bird said. "We've improved the software."

Top ad exec to depart
Separately, GM chief North American advertising executive is leaving the company after just over a year on the job, GM said on Thursday. Mike Jackson, one of the highest-ranking African-American executives at GM, will leave June 15 divulged the automaker in a statement. Jackson oversaw unprecedented change since taking over advertising for the automaker's eight brands and its corporate image.

The automaker has uprooted several long-help ad accounts amid an industrywide shakeup in automotive advertising. He also created GM Style, a celebrity fashion show help on the banks of the Detroit River, to lead into this year's North American International Auto Show.

"Throughout his tenure, Mike has contributed to GM's improved product image, and brought a creative approach to GM's market presence," according to the GM statement from GM marketing chief Mark LaNeve. The managers and support staff who reported to Jackson will now report to LaNeve.