GM Squeezes Pounds And Pennies To Attack Ford's Pickup Profit Machine — Leadership Newspaper
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GM Squeezes Pounds And Pennies To Attack Ford’s Pickup Profit Machine

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When General Motors Co (GM.N) engineers were developing the 2019 Chevrolet Silverado and GMC Sierra pickup trucks, some of them joined public tours of Ford Motor Co’s (F.N) Dearborn, Michigan factory to watch aluminum-bodied F-series trucks go down the assembly line. The redesign of the Ford F-series trucks, launched in 2014, set a new standard for fuel economy and lightweight vehicle construction. But armed with stopwatches and trained eyes, the GM engineers believed they saw problems.

“They had a real hard time getting those doors to fit,” Tim Herrick, the executive chief engineer for GM truck programs told Reuters.

His team did more intelligence gathering. They bought and tore apart Ford F-series doors sold as repair parts. Their conclusion: GM could cut weight in its trucks for a lower cost using doors made of a combination of aluminum and high strength steel that could be thinner than standard steel, shaving off kilograms in the process.

These pounds and penny-based decisions will have major implications in the highest stakes game going in Detroit: dominance in the world’s most profitable vehicle market, the petrol-fueled large pickup segment. What’s more, GM is banking on strong sales of overhauled 2019 Silverados and GMC Sierras to fund its push into automated, electric vehicles – a business many investors see as the auto industry’s long term future.

The risks are high given the hits automakers have taken from U.S. President Donald Trump’s trade policies.

Rising aluminum prices spurred by Trump’s tariffs are driving up costs on the Ford’s F-series, while rising steel and aluminum prices drag on GM results. GM also has a significant risk should the United States, Mexico and Canada fail to agree on a new NAFTA trade deal, given GM trucks built at its Silao, Mexico factory could face a 25 percent tariff if NAFTA collapses.



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