GM Pushes New Models During UAW Strike
September 25, 2007

Driving into General Motors’ massive test facility in Milford, Michigan,  outside of Detroit Tuesday, three workers carrying “On Strike” picket signs stood guard at the entrance as cars piloted by the automaker’s white-collar engineers streamed in as if it were any other day.

Deep inside the massive 4,000-acre grounds, GM was holding its “GM Collection” press event, scheduled long ago before there was even a hint of a strike by GM’s United Auto Workers union employees. This event and others like it held around the country are intended to build upon the traction GM has gained with some of its new models, like its Saturns and crossovers.

For now, however, the assembly lines producing Saturns, crossovers and all the other 2008 GM models are still, while plans for where future products will be built are being discussed and horse-traded by GM and UAW bargainers who were returning to the negotiating table Tuesday.

Abundant Inventory Overall

GM, which had a roughly 20 percent sales increase in August, has a reasonable stockpile of vehicles in its total nationwide inventory. Edmunds.com’s analysis shows the automaker has an average of 87 days to turn -– that is the average number of days it took to sell a vehicle after it arrived in the showroom. That’s well above the industry average of 60-65 days.

In fact, GM’s highest-volume sellers, mostly Chevrolet models, are in more than ample supply.

New Models in Tight Supply

Before the strike, GM was enjoying some sales momentum with specific brands and specific segments, and those popular models are in tight supply. If the strike lingers on, consumers may be unable to find the specific model or the model in the color or with the options they want at the desired price. They may well go elsewhere to buy.

In particular, GM’s new crossovers introduced in the past year have been hot sellers, going at list or near list without incentives, and still being in short supply. The Buick Enclave is in the shortest supply, followed by a crossover from the same family, the GMC Acadia. Both have days to turn under 25 days. The Saturn Outlook, part of the crossover trio, has 54 days to turn.

With its completely revamped product line, Saturn has seen double-digit sales increases in some months this year and was one of two domestic brands (along with GMC) to see a sales increase last year. Its Sky -- now the oldest model in its line though it is only entering its second model year -- and newly redesigned Saturn Vue, are in short supply at 31 and 42 days to turn respectively. A shortage of new Saturn models could dampen the division’s resurgence.

   

GM Models in Shortest Supply
Make	Model	Days To Turn*	Average MSRP August 2007
Buick	Enclave	20	$38,774
GMC	Acadia	24	$36,802
Saturn	Sky	31	$27,039
Saturn	Vue	42	$23,573
Chevrolet	Impala	44	$23,337
Chevrolet	Corvette	49	$58,661
Pontiac	G6	52	$21,874
Pontiac	Grand Prix	54	$22,760

Source: Edmunds.com

Beefing Up Production; Enclaves in China

Earlier this month, GM ramped up production of the crossovers at its plant near Lansing, Michigan, using temporary workers. At the same time, GM has been laying off workers at plants that produce slow-selling models.

The use of temporary workers is a sore spot with the UAW, which insists the strike is largely due to issues related to job security.

On Monday, the same day the UAW called for a strike, GM announced it will export 25,000 Enclave crossovers to China to be sold by Shanghai GM beginning in the second half of 2008. The export of Enclaves is part of a more than $800 million deal for GM to export U.S.-made vehicles and components to China.

Yet-To-Be Launched Models

And then there's the yet-to-be-launched models, most notably the Cadillac CTS and the Chevrolet Malibu.

  At Tuesday's 2008 GM Collection event, GM Vehicle Line Exec Gary White, who hosted the affair, reiterated what top GM executives have been saying for months: The Malibu is one of the most important product launches in GM's recent history to get it back into the midsize car game.

At the same time, the Cadillac CTS is critical for kicking off the second phase of the luxury marque's renaissance.

How Long?

So how long will the strike last?

Few saw this strike coming at all. Most, though acknowledging the issues were extremely difficult and complex, still thought the two sides would find their way to an agreement.

Obviously not.

The so-called experts who didn’t predict this strike are all over the map.

Consider this comment from Morgan Stanley’s Jonathan Steinmetz: “We believe a strike could last several weeks rather than several days, though not longer.” Talk about covering your bets.

Or this one by KeyBanc Capital Markets’  Brett Hoselton: “We believe the work stoppage will be short-lived.” How short-lived?

Anyone who guesses how long this strike will last is doing just that. What is certain is that a long strike hurts GM, the UAW and workers, both blue- and white-collar, and anyone whose livelihood is in some way touched by the auto industry.

Posted by Michelle Krebs at 11:05 AM under Analysis , Featured , GM | Comments (2) | digg this | Seed Newsvine