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Would You Buy a ChevySaab?
Jonathan Fahey, 12.09.02

General Motors is gathering its worldwide forces to try to win on a field littered with GM corpses: midsize cars.

Now available from the Swedish company General Motors bought in 1990: a saucy new Saab 9-3 sedan with rain-sensitive windshield wipers and cornering brake control. At $30,000, it will be aimed two ticks up the income scale from the pedestrian Chevy Malibu, which is due to arrive next August and will sell for less than $20,000. Unadvertised fact: The expensive car will share a chassis and many of its high-cost components with next year's Malibu--and also with the forthcoming Pontiac Grand Am, a new Saturn model and likely a Buick. The shared parts are the ones customers don't see. The outsides and the cabins will be very different.

If all goes as planned, GM (nyse: GM - news - people ) hopes the coordinated global strategy will shave 30% to 50% off its engineering costs, which account for up to half of the costs of developing a new vehicle, according to James Queen, GM's engineering chief. In addition, the company projects, parts-sharing will shave 3.5% off GM's $100 billion annual outlay for parts. Yet another part of this cookie-cutter production is to lay out all the manufacturing plants the same way around the globe.

GM is far from the first carmaker to share engineering and parts across its model lineup. Look at Toyota with Lexus, Honda with Acura, Volkswagen with Audi. It's not even GM's first attempt to share design: Remember the Buicks and Oldsmobiles in the 1980s and early 1990s that were barely distinguishable from one another?

But this is the first time GM has worked with its divisions abroad, and it is the company's most ambitious attempt to leverage its global scale to reap savings. If the effort succeeds, GM can save its shrinking midsize-car share, now 29% (see chart, left) in the U.S., from an unrelenting assault by Toyota's Camry and Honda's Accord. The Japanese think globally, so GM must as well.

"We can no longer afford the luxury of telling ourselves we're going after the domestic buyer," says GM Vice Chairman Robert Lutz. "That's just looking for a bigger piece of a shrinking pie."

A global strategy, though, is easier to envision than to implement. GM hasn't had any luck trying to move vehicles across the Atlantic. The Saturn LS and Cadillac Catera--rebadged Opels from its German division--have flopped.

One difference here is GM's plan to break down the fiefdoms that have operated among its divisions around the world. It was a historic event when 20 engineers each from GM North America, Opel and Saab gathered at the GM technical center in Warren, Mich. six years ago to sketch a midsize chassis, named Epsilon, to be used by all three divisions. GM bought Opel in 1929 yet never had had a meeting like this to plan a new car. Epsilon could determine the fate of five of General Motors' car divisions: Chevrolet, Opel, Pontiac, Saab and Saturn. General Motors sells 5 million passenger cars worldwide every year. But none of these marques makes money selling cars. Opel has lost $2 billion over the last three years. Saab hasn't made GM money over the 12 years it has been under GM control (see related story, p. 88). In North America, GM loses more than $1,000 on every passenger car it sells.

The first Epsilon-based car, the Opel Vectra, debuted in Europe this spring. Next (and the first available in North America) is the Saab 9-3, to be assembled in Trollhättan, Sweden. Then comes the new Malibu and a new Grand Am in 2004. All told, six to eight plants in Europe and North America will make as many as 1.4 million Epsilon cars a year for as many as seven brands in 13 body styles. GM will soon build all of its cars, from small to luxury, on similar so-called global architectures.

Each Epsilon-based car will have the same 4-foot-long steel midsection to which a set of parts--whether for a Saab or Malibu--can be attached at the same place on the assembly line, and in the same way. That's where the savings come in. The midsection and most of the parts are designed once. Plants don't have to be overhauled to accommodate different cars, and the car bodies don't have to be retrofitted for snazzy features. And engineers will be able to mix and match components to avoid the danger of every car's having the same driving feel. "Almost like a set of Lego bricks," explains Lutz.

Every Epsilon car will weigh somewhere between 3,200 and 4,000 pounds. The angle of the windshield will be changed by as many as 4 inches to make, say, a Grand Am sportier than a Malibu. The cars can vary in width by 2 inches and in length by 6 inches--the larger size to be used for a wagon version of the Malibu. The cars will range in price from $19,000 to $35,000.


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