New Minicar Plan

My reading of the situation is that GM will introduce the new car into production at its new plant in Poland and at an existing plant in Spain in the first quarter of the year 2000, Nigel Griffiths, an auto analyst at DRI/McGraw-Hill in London, told Reuters. And I expect Suzuki to start producing the car at its plant in Hungary at approximately the same time, he added.

GM announced earlier on Friday it is exploring cooperation with Suzuki to develop a new small car for Europe. The new car likely will be based on a platform the chassis, engine and transmission that Suzuki builds for its mini cars sold in Japan, including the Alto, the Cervo Mode and Wagon-R, Griffiths said.

 

The cooperation between GM and Suzuki will draw heavily Suzukis expertise in the the mini car segment, he said. The mini car is practically the mainstay of Suzukis production.

Mini cars comprised roughly sixty per cent of Suzukis production of 600,000 cars in Japan in 1995, Griffiths added.

GM and Suzuki declined to comment on the possible production sites and type of car that they might develop together.

The new model is code-named the X-car, but GM and Suzuki is likely to build separate cars based on the same platform, which now is roughly the size of the Cinquecento from Italian automaker Fiat SPA he said.

GMs announcement reflects an interest to enter the fast-growing market for mini cars in western Europe, which DRI forecast to expand to 1.2 million units in 2001 from 580,000 units in 1995, Griffiths said.

In other model segments, GM has been quite competitive in entering the market in Europe, but its been left behind in the mini car segment, he said.

This segment started to grow when the Cinquecento was introduced in 1992. French automaker Renault SA followed with the Twingo in 1993. U.S. automaker Ford Motor Co recently launched the Ka, and German automaker Volkswagen AG plans to enter this market through several of its brands in coming months.

GM plans to use the X-car to undercut these models in price, as most are expensive for their size, Griffiths said.

GMs version is not likely to be packed with luxury. There wont be any money spent on design that doesnt need to be spent, he said.

GM, which plans to start building cars in Poland before 1999 at a 470 million mark facility now under construction, probably will start production there with the mid-sized Opel Astra and add production of the X-car in 2000, Griffiths said.

Suzuki, which has built its mid-sized hatchback and sedan called the Swift in Hungary since 1992, said earlier it plans to build at least 50,000 cars in Hungary in 1996.

Output likely will rise to 95,000 units in 2001, once the X-car enters production, Griffiths said.

GMs annual sales of the X-car will likely reach 150,000 units a year in western Europe, but the demand in central and eastern Europe is hard to predict, Griffiths said.