GM CEO: Higher Oil Prices + Fuel Economy = Business Plan

(MoneyWatch)  General Motors' business plan will be shaped in large part by one basic assumption: oil prices will rise again.

GM CEO Fritz Henderson answered dozens of reporters' questions during a Monday press conference about the company's Chapter 11 bankruptcy protection filing. And among all of Henderson's answers, his remarks about oil prices revealed a lot about where GM is headed and what it might look like a year from now.

In short, he said the company is planning its business around the assumption that as the economy improves oil prices will rise.

Big whoop, right? A lot of folks discuss the imminent rise or fall of oil prices every day. It's a big deal for GM because Henderson more than implies that fuel efficient cars will be a major focus of the automaker.

Fuel economy has never been "the" backbone of GM's business model. And now, it appears, it is.

So, what does that mean? As BNET Auto discusses, it means a leaner company that will make smaller, fuel efficient cars. It also means the Chevy Volt, its hope for an electric car is still "the No. 1 product at GM." The Chevy Volt is moving forward and its expected to launch in 2010.

Oil prices may rise again, motivating consumers to seek out more fuel efficient cars and trucks. But whose to say they'll pick a GM?

Especially, when the government -- now a controlling stakeholder in the automaker -- thinks the Chevy Volt costs too much to make it commercially successful and is at least one generation behind Toyota on "green" powertrain development.

Some other thoughts from Fritz during the press conference:

• Oil prices: I think it's a fair assumption ... you have to make assumptions about your business, but I think our view is that oil prices will trend higher. We learned one thing in 2008 -- economic growth can drive sharp increases in oil prices.
• Consumer behavior: The consumer themselves have actually changed in many ways, depending on the segment, but for example the mid-sized car segment here ... consumers are behaving as if fuel prices are higher than they actually are today. I do think fuel economy will remain a key driver of the purchase decision for consumers.
• New federal Corporate Average Fuel Economy standards: We all reached agreement on what is, I think, one common harmonized standard for vigorous and challenging fuel efficiency requirements for vehicles going forward.We view that as -- to some degree -- a watershed because as a business we couldn't afford to be planning on three or four different sets of regulations within just the United States alone, so we're very supportive of that.
  
  
• Meeting fuel economy standards: We as a company have never missed a fuel economy guideline and we're not planning on doing that now. I think between demand, and the requirements of the law, the fuel efficiency of our vehicles is going to improve and I think the technologies that we're investing in, whether it's the Volt, whether it's hybrid technologies, whether it's basic research, is all important to get that accomplished.