GM's New Crop: Hot or Not?
By Alex Taylor III

(FORTUNE Magazine) – GM could desperately use some positive buzz as it copes with massive layoffs, plant closings, a debt rating that's sunk into the junkyard, and an activist investor (Kirk Kerkorian) breathing down its neck. CEO Rick Wagoner acknowledged in early June that the auto giant does have one way out of this mess: Make cars people actually want to buy. And as for that buzz? GM's decided to borrow from a tactic Lee Iacocca perfected at Chrysler more than 20 years ago by offering a sneak preview of future models. In early June, GM rolled out 21 new cars and trucks that it will put on sale between now and 2009. The initial verdict: promising.

Despite an overall reduction in its number of models, GM is expanding its lineup at long-neglected Saturn. Over the next 30 months Saturn gets five all-new cars, completely replacing the slow-selling lineup currently at dealers. Two are entries in product segments where Saturn hasn't competed before--a three-row sport-utility vehicle that goes on sale in the fall of 2006 and a two-seat sports car called Sky that arrives early next year. Sensible Saturn, it seems, may be gaining some much needed sex appeal.

For profits, GM depends on its light trucks, which it's also retooling, specifically with all-new full-sized SUVs like the Chevy Tahoe and the blingy Cadillac Escalade. (They also reach market early in 2006.) The vehicles appear little changed on the outside, but GM has upgraded the interiors and made a host of technical improvements. Thanks to a new feature that idles four of the eight engine cylinders when they aren't needed, these 2007 models will get 9% better fuel economy, or more than 20 mpg. GM insists it still expects people to buy giant SUVs despite high gas prices.

Pontiac and Buick are big losers. Their lineups shrink to a maximum of eight vehicles from the current total of 18. While historic, these brands have suffered from corporate inattention and shifting buyer preferences, and their growth prospects are limited. Says a GM executive: "The market tells you what to do; you don't tell the market." -- Alex Taylor III