DETROIT (AP) -- General Motors Corp.'s cash problems have snuffed out plans for a small diesel engine that would have improved the fuel efficiency of the company's light-duty pickup trucks.
Citing the poor economy, the struggling automaker announced Wednesday that it is indefinitely postponing its plan to put a 4.5-liter Duramax V-8 diesel engine in the Chevrolet Silverado and GMC Sierra pickups next year.
GM, which is living on $13.4 billion in government loans and is seeking another $16.6 billion, cut its capital spending from $7.5 billion in 2008 to about $5.1 billion this year as it tries to conserve cash and survive the worst U.S. auto sales downturn in 27 years.
The company said in a statement that it hopes to someday have the smaller diesel engine in its lineup.
The engine would have been more efficient that GM's gasoline engine offerings or its current 6.6-liter heavy-duty V-8 diesel. The company also offers a gasoline-electric hybrid powertrain in the pickups.
Aaron Bragman, an analyst for the consulting firm IHS Global Insight in Troy, Mich., said postponing the diesel could hurt GM's effort to meet increasingly higher government fuel economy standards.
"Diesels make a lot of sense for trucks and SUVs because they can significantly increase efficiency," Bragman said. "But they also add to the cost."
GM, he said, may have research that shows people wouldn't pay the price premium for diesels over gasoline engines.
Given its cash troubles, GM had to cut somewhere, and it was wise to cut the diesel and spare small-car and electric vehicle programs like the Chevrolet Volt, said independent auto analyst Erich Merkle.
He doesn't think it will hurt GM too much because competitors also are delaying new small diesels, which generally cost consumers about $5,000 more than gasoline engines.
"There are a lot of automakers out there that have been talking about doing a diesel. But they have been delaying them and pushing them back," he said.
GM had completed the engine's design and was just starting to outfit its Tonawanda, N.Y., engine plant near Buffalo to build the diesel, said spokeswoman Sharon Basel. The company will save money by not purchasing additional tooling to build the motor or completing integration of the engine into the trucks.
The Tonawanda factory, which employs about 1,200 workers, has several other engine lines including four- and six-cylinder gasoline motors. Basel said about 100 workers would have been assigned to the diesel line and likely will remain on layoff until demand increases for the plant's other engines.
GM is in talks with other automakers and engine manufacturers about jointly building the 4.5-liter diesel, said spokeswoman Susan Garvaglia.
"If it's a win-win to partner with another third party, we would certainly do this," she said.