Detroit, Mich. – The future of GM and Chrysler depend on increasing their production of small cars and hybrids, says the Obama administration — even as sales of small cars and hybrids are in the tank.
Obama has been hawkish on hybrids, pouring money into GM in part to force it to transition to hybrid vehicles. “The plants shut down for a period during the height of the Depression, and major shifts in production have been required to meet the changing times,” he has said. “Tractors became automobiles. Automobiles became artillery shells. SUVs are becoming hybrids as we speak.”
Well, no. GM announced today that it has suspended production of the Chevrolet Malibu hybrid due to poor sales. A glut of 2009 models is sitting on dealer lots. In fact, the Malibu hybrid has been losing sales to its sister four-cylinder gasoline model, which gets similar mpg numbers (22 city/33 highway compared with 26/34 for the hybrid) but is $4,000 cheaper.
Meanwhile, in order to meet government mandates, Fiat-run Chrysler says it plans a profound makeover to adopt the European automaker’s platforms in order to expand its small-car lineup. Plans include production of the Fiat 500 minicar as well as the Alfa Romeo MiTo which have been popular in Italy.
Trouble is, Chrysler will be selling in the U.S. market where small car sales in May dove 39 percent compared to a 27 percent decline in SUV sales.
With its vast experience running auto companies, however, Washington apparently sees something that the industry has been missing all these years.