General Motors Co. has freed up cash to fund a major update of its full-size pickups, a bet that consumers and businesses will resume buying trucks after a long lull in sales.
Chairman and Chief Executive Edward E. Whitacre Jr. has agreed to fund the move, said GM product chief Tom Stephens. The remodeling could cost the company close to $1 billion, a person familiar with the matter said.
GM, which had relied on full-size pickups such as the Chevrolet Silverado for a major portion of its U.S. revenue and operating profit, had put off redesigning the trucks as its finances collapsed and it underwent a government-backed bankruptcy reorganization last year.
Now, unlike in the 1990s truck boom, the company plans to revitalize its pickup line at the same time it invests heavily in small, fuel-efficient cars as well as in the electric Chevrolet Volt due later this year. At this week's big Detroit auto show GM displayed its new Chevy Cruze, which it hopes will be its first strong contender in compact cars in decades.
Trucks sales sagged in the past two years after gasoline spiked to $4 a gallon in 2008 and home sales -- a big driver of truck purchases by contractors and builders -- collapsed amid the recession.
Yes, they have other products coming out -- but you just have to wonder what the thought process behind this move. Guys -- do you really think oil is going to stay low as the economy starts to grow?