GM is getting whacked harder than any of the major automakers by the industry-wide plunge in car sales, as Americans switch in ever larger numbers from cars to “trucks,” which include pickups, van, SUVs and crossovers.
In the first half of 2017, GM’s car sales in the US plunged 19%, and in June 38%.
The rest of the industry (without GM) booked declines in car sales of “only” 10% in the first half and 9% in June. Plants have been temporarily shut down, and entire shifts have been eliminated. Now comes the next step: Ending production entirely of some models, shuttering plants for good or converting them to making trucks, and fretting about jobs.
GM is losing ground in the bitter industry-wide reality of dropping car sales. At the end of June, some car models exceeded a catastrophic 180 days’ supply. And that’s already being discussed between the UAW and GM, according to UAW president Dennis Williams.
“We are talking to [GM] right now about the products that they currently have” at underutilized car plants, such as Hamtramck in Michigan and Lordstown in Ohio, and whether these models could be replaced with more popular vehicles such as crossovers, he told reporters today, including Reuters. “We are addressing it” Six passenger cars are currently under review at GM and might be cancelled after the 2020 model year, Reuters “has learned from people familiar with the plans”: Chevrolet Volt (a hybrid, not to be confused with the Bolt, an EV), Buick La Crosse, Cadillac CT6, Cadillac XTS, Chevrolet Impala, and Chevrolet Sonic. Some of the six models GM is thinking of canceling were its bread-and-butter.
GM has already done away with the Cadillac ELR, a dressed-up 2-door luxury coupe version of the Volt, but a lot more expensive. Other automakers already cancelled cars for the 20 model years, including the Dodge Viper; the Volkswagen Eos, a convertible suffering from the decade-long slump of all convertibles; the Honda CR-Z hybrid 2-door; the Lincoln MKS, a nicely groomed Taurus; and Toyota’s entire Scion brand, with some models migrating to the Toyota brand and others, such as the Scion t C, just gone. It has wound down production of the Dodge Dart (Fiat comes to mind) and the Chrysler 200. The remaining cars it sells in the US will be made in Mexico, Canada, and other countries.
It will only make trucks in the US, which are a lot more profitable, such as the Ram and the Jeep-branded SUVs.
But cancelling six cars, including bread-and-butter models, as GM is doing, is a sign that the collapse of car sales in the US isn’t just a temporary hiccup.
GM’s Hamtramck plant in Detroit, which builds Chevrolet Volt, Buick La Crosse, Cadillac CT6, Chevrolet Impala – all four them in the list above of cars potentially on the chopping block – is a sitting duck. The typical GM assembly plant builds 200,000-300,000 vehicles a year.
In the first half, it built fewer than 35,000 cars, down 32% from the same period in 2016, according to suppliers familiar with GM’s U. Rental car companies, which are the biggest car buyers out there, have found themselves over-fleeted due to industry changes, including the surging use of rideshare services even by business travelers [Answers Emerge: This is How Badly Uber Eats into Hertz].
And so rental car companies are trimming their purchases.
Which leaves automakers with less of an outlet for their cars.