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By Mike Caggeso
Plagued by plummeting U.S. sales and $4-a-gallon gasoline, General Motors Corp. (GM) may sell its four-foot-tall Chevrolet Beat in U.S. markets, sources told Bloomberg News.
The subcompact three-door hatchback was unveiled at last year's New York International Car Show, though GM said it would be produced overseas and wouldn't immediately be sold in the United States.
However, both U.S. production and sales are possible, the sources said.
U.S. government fuel efficiency mandates are also playing a role. By 2020, automakers are required to reduce fuel use by 40%.
GM at least knows drivers around the world are excited about the Beat compared to two other prototypes it unveiled. Votes of an online poll on GM's Web site overwhelmingly preferred the Beat, which received 1.8 million votes worldwide.
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"The people have spoken. The vote count tripled all previous GM online consumer surveys, telling us the Beat resonated with customers all around the world," said Ed Peper,general manager. "Chevrolet was overwhelmed by the positive reaction to each of the ‘triplets,' but the Beat was the clear winner."
Though not a hybrid, the Beat can get as much as 40 miles a gallon. GM – whose autoline is heavy on trucks, SUVs, and the Hummer – hopes that number will sing to U.S. drivers, who are hampered by record gasoline costs.
"This is a very big change for GM," John Wolkonowicz, an analyst at Global Insight Inc. in Lexington, Mass., told Bloomberg. "They have no choice. There's never been as rapid a shift in consumer demand in the history of the auto industry."
Demand isn't just shifting away from gas-guzzlers, but U.S. carmakers in general.
For the past 76 years, GM has been the world's biggest automaker. But Toyota Motor Corp. (ADR: TM) almost stole that title, selling only about 3,000 cars (9.366 million total) less than GM's 9.369 million.
Though the Beat would be a pioneer in the U.S. market, it's up against an army of established subcompacts overseas. On top of that, Tata Motor Ltd.'s (ADR: TTM) forthcoming $2,500 Nano is generating huge buzz.
The trend is playing out tragically for GM, as Chairman and Chief Executive company will close four truck and SUV plants. The maneuver will cut its North American truck capacity by 700,000 vehicles and is expected to save the company $1 billion.announced in June that the
"From the start of our North American turnaround plan in 2005, I've said that our goal is not just to return GM to profitability, but to structure GM globally for sustained profitability and growth," Wagoner said in a statement. "Since the first of this year, however, U.S. economic and market conditions have become significantly more difficult. Higher gasoline prices are changing consumer behavior, and they are significantly affecting the U.S. auto industry sales mix."
As far as the company's Hummer brand is concerned, Wagoner said GM is "considering all options from a complete revamp to a partial or complete sale of the brand."
GM Stock: Bargain or Junk?
Bloomberg cleverly pointed out that GM's current market value is smaller than that of Mattel, Inc. (MAT), maker of Matchbox cars.
Specifically (and fittingly to such comparison), GM is only one-tenth the size of what it was in 2000.
Worse for investors, GM's stock price is trading at its lowest price since 1954, Reuters reported.
Year-to-date, GM has been the worst performing stock on the Dow Jones Industrial Average Index, falling nearly 60%.
The damage has actually lifted the value of its 25-cent quarterly dividend, but that's about the extent of the good news.
"We remain cautious on the shares of Ford and General Motors in spite of recent share price declines," Michaeli said, Reuters reported.
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