The future of General Motors' struggling car business in both Europe and North America is dependent on its upcoming Epsilon cars.
From late next year to 2004, the Epsilon family will spawn eight to 10 high-volume mid-sized vehicles - including the next Opel/Vauxhall Vectra and Saab 9-3.
The stakes for GM are huge. The current Vectra is outclassed in the European upper-medium segment by almost every competitor. And GM has yet to halt its historic market share slide in the USA - from 44.5 percent in 1980 to today's 28.7 percent. Epsilon's annual volume of 1.2 million units will be a massive effort to turn things around.
Moreover, Epsilon combines various strategies that Chairman Jack Smith hopes will solve GM's other problems: mediocre profits, an underperforming stock and uninspiring car design.
Here is why Epsilon is important:
By using just one architecture, GM will cut billions of dollars from its vehicle development costs. GM will also be able to build a variety of vehicles, with varying sizes, on the same assembly line
At the same time, GM says it will give each car its own distinct character. GM has suffered for decades from overlapping brand images and lackluster designs - particularly with the Vectra in Europe
Epsilon cars will be sold globally. This will allow the company to finally break down national barriers and achieve the economies of scale possible for a global company of GM's size
Epsilon assembly plants will make significant use of modules and large pre-assembled groups of parts. GM and other auto companies are using modules to shift development and production costs to suppliers.
Suppliers say the latest and largest additions to the Epsilon family are the Buick Signia and Pontiac Banner. They say the vehicles will debut in the USA by early 2004 with combined annual volumes as high as 200,000 units.
'They are mainstream products important to the future of the two divisions,' said GM spokesman Tom Kowaleski.
So far GM has committed more than $2 billion to two new Epsilon assembly plants in Germany and the USA, and Epsilon-related renovations at two other plants in Sweden and the USA. Estimated capacity for those four plants is almost 1.2 million units per year.
Originally, GM's Delta small-car platform was to be its first global car architecture and the final solution to its money-losing North American small-car lineup. But last year GM's top executives, facing a losing battle in the US small-car market and unhappy with the initial Delta designs, dramatically scaled back plans for Delta to concentrate more resources on truck-like crossover vehicles.
That has put pressure on Epsilon and its lineup of sedans, hatchbacks and wagons. The next-generation Saab 9-3 will go into production in Sweden in late 2001. Through 2004, the 9-3 will be joined by next-generation Epsilon replacements for the Opel/Vauxhall Vectra and Omega in Europe. In the USA, there will be Epsilon replacements for the Chevrolet Malibu, Saturn L series and Pontiac Grand Am, as well as the all-new Banner and Signia.
Suppliers also say there are tentative plans for Epsilon replacements for the Oldsmobile Alero and Intrigue.
An eleventh Epsilon vehicle, the next-generation Saab 9-5, will likely debut after 2004.
The Saab vehicles will be built at Saab's existing plant in Trollhattan, Sweden. In January, Saab announced it was investing about E100 million to expand the plant and forecasts its eventual capacity will rise to about 200,000 vehicles per year.
Opel will launch its first Epsilon, the Vectra, out of a new E435 million plant in Rsselsheim, Germany. The modular assembly plant will have capacity to produce about 270,000 vehicles per year. The car will be badged as a Vauxhall in the UK.
In the USA, GM is building a new $1 billion Epsilon plant in Lansing, Michigan. GM is also spending $500 million to convert its existing Fairfax, Kansas, assembly plant to Epsilon.
Additionally, GM will build its next-generation Saturn L series in Wilmington, Delaware, home to the current L series. Suppliers say GM, disappointed with sales of the current L series, plans to build about 160,000 Epsilon L series per year, down from original forecasts of 250,000 for the current car.
Robert Sherefkin and Diana T. Kurylko contributed to this report