GM is hurting, folks.  Seems development dollars are at a premium at
the world's largest automaker.  After a few years of giving the
opponents angles (like a boxer), with the successful resurgance of
Cadillac and the hot 'Vette, it appears GM is now just backing up and
fighting off the ropes.  Hopefully GM can counter a little with that
new Pontiac 2-seater soon to debut, because GM needs to stay in the
fight!

And no one be happy, if the GTO get canceled.  While its styling is
everything everyone hoped for, the car is sweet mechanically.  It would
be a shame to lose yet another RWD American performance car.

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By Ed Garsten

DETROIT -- General Motors Corp. has killed plans for a new line of
rear-wheel drive passenger cars slated to reach North American
showrooms in 2008, in large part to free up resources to bring its next
generation of large pickups and sport utility vehicles to market
quicker.

The news comes after GM reassured investors, suppliers and Wall Street
analysts last week that future car and truck programs would remain on
schedule despite a new cost-cutting effort.

The automaker is under severe pressure to streamline after announcing
last week its 2005 earnings would fall as much as 80 percent below
previous estimates.

"While work on particular North American applications of our premium
rear-wheel drive midsize vehicle architecture have indeed been stopped,
we have begun to study new approaches to efficiently capitalize on
future opportunities we see for future midsize rear-wheel drive
applications," Marc Beckers, a spokesman for GM, said.

The rear-drive "global architecture" -- dubbed Zeta -- was to provide
the basic underpinnings for an array of cars and crossover vehicles for
markets around the world. It will continue to be the basis for products
sold in regions outside North America.

GM's decision to kill the Zeta program puts the brakes on development
of the next generation Pontiac GTO sports car, and new entries for
Chevrolet, Buick and Pontiac. The current GTO is already being produced
by GM's Holden unit in Australia.

Bob Lutz, GM's vice chairman for product development, canceled
development of the premium rear-wheel models for North America,
according to two people familiar with the situation.

It was Lutz who first championed the new rear-wheel drive platform. The
renowned car expert announced the Zeta program in 2003 as the industry
was turning its attention toward rear-wheel drive vehicles.

But he pulled the plug on the North America models after determining
the vehicles could not be engineered and assembled to sell at prices
competitive with the popular Chrysler 300C, Ford Mustang and other
models, without sacrificing quality and content.

In addition, GM is anxious to free up resources to speed up the launch
of its new line of full-size pickup trucks. They are not expected to
arrive until 2006.

Many in the industry expected the Zeta architecture would mean the
return of the Chevrolet Camaro and production versions of the Buick
Velite concept car, which debuted at the 2004 New York auto show to
rave reviews.

"This is scary. It puts GM behind the eight ball," said Joseph
Phillippi of AutoTrends Consulting in Short Hills, N.J. "It makes you
wonder why can't they get it right. Where does it seemingly go wrong?"

The retreat from Zeta could delay the introduction of GM's new
rear-wheel drive passenger cars by at least a year, Phillippi said.

That's bad news for the automaker, which has seen only lukewarm early
sales for several of its newly launched products, such as the Pontiac
G6, Chevrolet Cobalt and Buick LaCrosse. The new Chevrolet Equinox, a
small SUV, has been a strong seller.

Global Insight market analyst John Wolkonowicz said GM's decision to
stop the development of Zeta-based vehicles for North America means a
missed opportunity to compete.

"The Chrysler 300C is a watershed car like the 1986 Ford Taurus," said
Wolkonowicz. "With Zeta, GM had an answer."

For sure, GM has not given up on rear-wheel drive vehicles. Two
roadsters, the Pontiac Solstice and Saturn Sky, will be rear-wheel
drive entries. Other rear-wheel drive GM cars include the Cadillac CTS
and STS sedans, the Chevrolet Corvette and the Pontiac GTO.

GM Chairman Rick Wagoner last week said there would be no reduction in
capital spending in light of the abrupt profit warning and signaled new
product programs would be safe from the budget ax.

"Product remains the first and most important element of the strategy
to get North America on track," he said.

Through February, GM sales are down 10 percent from last year and its
market share has slipped to 24.9 percent, compared with 26.7 percent a
year ago, according to Autodata Corp.

"When you have an automaker struggling from a market share or sales
standpoint, the worst thing you can do is slow introduction of
product," said Erich Merkle, an analyst with Grand Rapids consultants
IRN Inc. "It may point to some issues GM is having internally, perhaps
from a communication perspective between what the market wants and what
GM can afford."
---

Patrick
'93 Cobra