GM steps up production of large SUVs at Janesville

Thursday, March 23, 2006

From a story by Jeff Green (Bloomberg News) that ran in the Milwaukee Journal Sentinel:

General Motors Corp., seeking to capitalize on demand for its largest sport utility vehicles, is increasing production of the Chevrolet Tahoe and other redesigned SUVs at three plants.

GM will build as many as 12,000 more Tahoes, GMC Yukons and Cadillac Escalades than originally planned this year at factories in Janesville; Arlington, Texas; and Silao, Mexico, GM spokesman Dan Flores said. Flores wouldn't say how many of the SUVs GM, the world's largest automaker, plans to build in 2006.

"GM is kind of betting the ranch that they can sell SUVs in an environment of $2.50-a-gallon gasoline," said David Healy, a Burnham Securities Inc. analyst in Sierra Vista, Ariz. He estimates the company makes a pretax profit of about $15,000 on each of the trucks.

General Motors might be able to sell large SUVs while gas is $2.50 a gallon, but does anyone expect gasoline prices to stay so "low" in the coming years?