General Motors is putting the pieces in place to become a leaner, more profitable automaker by the end of the decade. Part of that strategy is increasing the lifecycle of its vehicle architectures and increasing capital spending in the short term in order to pay for necessary expenditures. But there’s a lot more to the strategy.
Other elements of the cost-cutting strategy include longer-term contracts to suppliers, which could allow for cheaper parts. The automaker is also gearing up to use less materials like steel and plastic as GM engineers develops new vehicles to be hundreds of pounds lighter than previous models.
In addition, GM is working on a new, low-cost vehicle architecture for emerging market vehicles with its Chinese joint venture partner, Shanghai Automotive Industry Corp. The effort represents a $5 billion investment, and is the most extensive collaboration yet.
GM President Dan Ammann revealed earlier this year that the automaker is procuring complex dies, the ones used to stamp metal vehicle parts, from China for a 20-40 percent cost savings compared to units procured from U.S. or Europe.