GM Slashes Truck, SUV Production Due to Slow Sales
April 29, 2008
Continued slow sales prompted General Motors to announce Monday that it will cut
production of large pickup trucks and sport-utility vehicles this year.
In total, GM said it is slashing production by about 10 percent, or about 138,000 vehicles at four plants in the U.S. and Canada. About 3,550 workers will be out of jobs as a result.
The question being asked is will sales of those high-profit vehicles, in light of skyrocketing gasoline prices, ever bounce back?
GM's latest move will reduce by 88,000 the number of pickup trucks GM had planned to produce this year, and lower by 50,000 the number of SUVs it had planned to build, the company said in a statement. Production cuts hurt auto makers because they eat into the revenue the affected plants generate.
Truck, SUV Sales Slump
GM, in its statement announcing the production cuts, noted that the full-size pickup truck and large SUV segments are down 15 and 26 percent respectively for the first quarter of 2008. That was on top of a challenging year in 2007.
“With rising fuel prices, a softening economy, and a downward trend on current and future market demand for full-size trucks, a significant adjustment was needed to align our production with market realities,” Troy Clarke, president GM North America, said in a statement. “This is a difficult move, but we remain committed to retaining and growing our leadership position in the full-size truck market.”
Clark noted that GM has 40 percent of the full-size truck market and more than 63 percent of the large SUV segment.
GM Cuts
In total, GM said it is slashing production by about 10 percent, or about 138,000 vehicles at four plants in the U.S. and Canada; GM had planned to build 1.3 million of such vehicles. About 3,550 workers will be out of jobs as a result.
GM said it would cut approximately 88,000 units of full-size pickup and 50,000 units of full-size SUV production from its original plan for 2008. In July, GM will reduce shifts at assembly plants in: Flint, Mich., which builds the heavy-duty Chevrolet Silverado and GMC Sierra; Janesville, Wis., which builds the Chevrolet Tahoe, Chevrolet Suburban, GMC Yukon and GMC Yukon XL; and Pontiac, Mich., which builds the Silverado and Sierra.
In September, GM will cut a shift at its Oshawa, Ontario, plant, which also makes the Silverado and Sierra. That action takes place on the eve of the expiration of GM’s contract with the Canadian Auto Workers union so the plant likely will be the subject of some discussion at the bargaining table.
GM already had cut production at the Pontiac, Flint and Oshawa plants because of slowing demand and a strike by workers against supplier American Axle & Manufacturing Holdings Inc. That strike started in February and caused parts shortages that forced GM to cut production and close the plants.
Posted by at 10:02 AM under Commentary , GM | Comments (1) | digg this | Seed Newsvine
In Canada we already buy 55 percent compact and smaller cars. The segment is very competitive and this is what the US market will look like sooner rather than later.
The fact that a Chevy Cobalt gets much worse gas mileage than a Civic and Corolla translated into Civic and Corolla dominating this segment. The Civic is 10 years bestselling car in Canada with the Corolla close behind. It also helps that both cars are manufactured here in Ontario, Canada.
When GM decides to focus on fuel economy and get rid of their old pushrod engines, people will take notice. GM saves over $1000 on every vehicle they sell with these antique, noisy motors. They are addicted to the savings. Notice how Ford, Honda, and Toyota have moved to the more expensive and fuel efficient DOHC designs.
GM has dropped to about 22 percent of the market and is also dropping in the Canadian market also. I used to buy their cars in the 80's but until they build a car that needs limited repairs for 10 years, has a modern engine, top in class fuel efficiency, and good resale value then I and thousands of others will continue to shun them.
Posted by: jonny | May 03, 2008 at 7:22 AM