GM Shifts Plans for Hybrids, Will Focus on Larger Vehicles

General Motors Corp. on Thursday postponed plans to build hybrid autos and said it would shift the focus of its fuel-saving efforts from small sport utility vehicles to larger SUVs and pickups.

The move is a bid to protect the company’s most profitable models from higher gasoline prices.

The world’s largest automaker said it would offer hybrid versions of vehicles such as the Chevrolet Silverado pickup and GMC Yukon SUV starting in 2007. The trucks will use 30% less fuel by running on a combination of a gasoline engine and electric motors.

U.S. automakers rely on their least fuel-efficient vehicles, pickups and SUVs, for most of their profits in North America as they lose market share to Japanese companies on cars.

General Motors in 2002 sold about 1.5 million full-size pickups and SUVs, representing 31% of its U.S. sales. Higher fuel prices might hurt demand for the autos, investors said.

“In order to protect that franchise and make sure that truck demand doesn’t go away, they really need to invest in this technology,” said Brian Beargie, a bond analyst with Banc One Capital Markets Inc.

General Motors is developing the capacity to build as many as 1 million gasoline-electric vehicles annually by 2007 to address any rise in fuel prices, meet government fuel-economy requirements and compete against similar fuel-efficient vehicles. So far, only Japan’s Toyota Motor Corp. and Honda Motor Co. offer hybrid cars in the U.S.

Toyota in October sold 4,085 Prius hybrids, the model’s best month since its U.S. release in 2000. Honda sells a total of about 2,000 Civic Hybrid and Insight models a month, and the company plans more hybrid models starting next year.

Ford Motor Co., the second-biggest automaker, expects to start selling a hybrid version of the Escape SUV next year, while DaimlerChrysler’s Chrysler division intends to market in 2004 a hybrid Ram pickup that runs on diesel fuel.

General Motors’ original hybrid plan, announced in January, called for the introduction of a full hybrid version of the Saturn Vue small SUV in late 2005.

The hybrid Vue, which would have competed with Ford’s Escape, was designed to boost the fuel efficiency of the regular version by 50%.

GM instead will sell a version of Vue in 2006 with a less expensive hybrid system that cuts fuel use no more than 15%.

The same system will go into the Chevrolet Malibu car in 2007. General Motors also halted plans to add that system to the upcoming Chevrolet Equinox small SUV in 2006.

“The bottom line is that GM has delayed their hybrid program,” said Daniel Becker, director of the global warming and energy program for the Sierra Club environmental advocacy group. “By the time these vehicles come to market, it will be 10 years after Toyota introduced the Prius in Japan and seven years after Honda started selling their hybrid.”

General Motors is taking a more conservative approach to hybrids because it isn’t convinced that the market will be large enough to be profitable, said Thomas Stephens, group vice president in charge of the company’s engine and transmission unit.

Demand probably will stay low if federal and state governments don’t offer tax incentives to consumers and if gas prices stay at current levels, he said.

General Motors shares fell 7 cents to $42.88 on the New York Stock Exchange. They have gained 16% this year.