GM plans to market small cars in the US; Idled Plants to be Re-structured

General Motors is planning to build small and fuel efficient cars in the United States that can compete with the B segment of the market as tougher mileage guidelines may be implemented based on the proposal of the Obama administration.

GM executives reveal that it might structure one of its plants that is scheduled to go on idle for the production of the vehicle. The plan will create 1200 jobs, which includes salaried and hourly labor. The car manufacturer has not selected a specific plant yet, but the investment is said to be between $600 million and $700 million.

In the US and around the globe the segment of small cars is the fastest growing market. The GM designers believe that the new generation of small cars will be ahead of the pack in terms of customer appreciation.

The specs of the new car have not been revealed. It will not be like Chevrolet Aveo which is built in South Korea or the Spark which is due for release in 2011. The Volt and the Cruze belong to the segment of larger cars. The company has also shown small, concept cars like the Groove and the Trax.

Cars in the B segment are considered entry-level, small cars. The Toyota has the Yaris in the B class while Honda has Fit, and Ford markets Fiesta. Aveo represents GM in this cluster.

According to company executives the chosen factory will be producing around 160,000 cars. Production of the small cars is in-line with the government proposal of raising the standards of fuel efficiency to 35.5 miles per gallon for 2016 car models. Right now fuel mileage standard is set at 25.30 mpg. This was prompted by skyrocketing fuel prices, which last month marked by $0.42 of increase in the price of gasoline.

The car industry believes that the demand in class b cars will continue to grow. GM has also made the plan to make production of the small car profitable for the company amid its financial problems.

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