posted by GM Fan on Nov 15
General Motors are delaying the production of the Chevrolet Cruze and other vehicles as company executives are making decisions on a day to day basis. The cut in product development finances will save GM a hefty $1.5 billion.
In the recent weeks, the company has announced to the public that it will be cutting its budget for product line expansion for as much as two years with a greater percentage of belt-tightening happening in 2009.
Experts see the move as an anxious step to stay afloat amid the credit crunch. This means that dealerships will not get the cars that they are supposed to sell on time, cars which will help GM recover.
Officials of GM reveal that capital expenditure portions for engineering, design, and other things will mean money going out from the GM books and needs to be cut. They have disclosed that the current global financial disaster is one of the toughest challenges faced by the company.
Cars like Camaro and Chevrolet Volt will not be delayed but most of the range of cars will. Auto industry experts say that holding production is a threading on dangerous waters since this may mean falling short of sales goals in the future.
Some are speculating that GM has reached a critical level of cash flow. Sources say that with full blast production the company uses up around $1 billion per month. The company has only $17 billion left of its funds thus the development delays might be signs of desperation.
GM needs around $14 billion to maintain full operations and financial experts are seeing a very difficult winter ahead for the car manufacturer.
There will still be debuts in 2009. These will be the GM vehicles that have been developed like the Buick La Crosse and the Camaro from Chevrolet. The Chevy Volt is also expected to hit the market by next year. Some industry experts are wondering why the Cruze, expected to bring in the volume of sales, will be delayed.