It appears that General Motors may resume development of a range of RWD large cars after plans were put on hold last month following fears that the Bush administration would raise corporate average fuel economy (CAFE) standards. The original porposal was to raise it by 4% a year, meaning fleets would have to average 34mpg by 2017 – 30% higher than today’s levels.

GM Vice Chairman Bob Lutz has now revealed that development will resume, but the cars may have to feature more fuel-efficient engine options. The announcement came during an interview with the GM product czar on Autoline Detroit, where he said "I think we'll wind up concluding that we should go ahead and do the cars, albeit possibly with some different powertrain options and so forth." Smaller and more efficient engines, including possible hybrid and diesel versions, would mean that GM’s CAFE levels could meet the impending raise in US fuel economy standards.

The upcoming Camaro coupe due to hit showrooms in 2009 is safe, as is the recently revealed Pontiac G8 sedan, which will go on sale next year. New models rumoured to be in the pipeline that any changes will effect include the next generation versions of the Chevrolet Impala, Pontiac GTO as well as several new Cadillac models.

GM is doing it tough in a market where its cars are falling out of favour against a raft of high quality imports. But despite losing the title of the world’s number one carmaker last month, GM still managed to post a first-quarter profit of $62 million.