Hounded by overcapacity. But other automakers do just fine with cars.
Starting in mid-November and going through the rest of the year, General Motors will close its Detroit-Hamtramck assembly plant – its only remaining factory in its hometown – and lay off about 1,500 workers, “people familiar with the plan” told the Wall Street Journal. When the plant does resume production, output will be cut by 20%, and 200 people will be out of a job.
Back in 1999, the plant produced over 200,000 Cadillacs and Buicks a year. This year, it might barely produce 80,000 vehicles.
The Detroit-Hamtramck plant has already been subject to temporary layoffs earlier this year when an evening work shift was eliminated – part of the 10,000 layoffs that were announced last December.
In July, the plant cropped up in discussions between the UAW and GM. At the time, six passenger car models were “under review” at GM. And there was talk that they might get cancelled after the 2020 model year. The models: Chevrolet Volt (the hybrid, not the Bolt, an EV), Buick LaCrosse, Cadillac CT6 (the brand’s new luxury flagship sedan), Cadillac XTS, Chevrolet Impala, and Chevrolet Sonic.
The Detroit-Hamtramck plant makes some of these slow-selling cars, including the Volt, the Buick LaCrosse – dealers are sitting on 10 months’ supply! – and the Cadillac CT6.
GM car sales are getting clobbered not only by a change in consumer preference for SUVs and compact SUVs (crossovers), but also by its competitors. GM cars sales have plunged 18.4% year-to-date, while car sales of the rest of the industry without GM have dropped “only” 9.4%. GM’s car sales are getting crushed at nearly twice the rate of the rest of the industry!
But not all automakers suffer from the dying-car-sales syndrome. A few other manufactures are making cars whose sales are booming. These cars appeal to consumers and can compete just fine with crossovers. The largest one of these automakers is Subaru, whose car sales have shot up 9% so far this year, to nearly a quarter million units.
And Honda, in third position in car sales so far this year, behind Toyota and GM, has seen only a 2.5% decline in its car sales, compared to GM’s 18.4% plunge. So blaming the fickle consumer, as GM likes to do, for its dying-car-sales syndrome isn’t quite the right answer.
To deal with its dying-car-sales syndrome, GM has been cutting production and has been laying off people. But even its crossover production took a hit. On September 22, it sent a notice to employees at its Spring Hill, Tenn., assembly plant that makes the GMC Acadia and Cadillac XT5 crossovers – among the very vehicles GM is counting on as the engine for sales growth.
GM told employees that it would eliminate the entire third shift due to “moderating” sales. About 1,000 workers would be cut. These cuts wouldn’t be a temporary layoff for a few weeks, as there was no indication that the shift would be brought back in the near future. “We believe the best way to react…is to reduce output,” the statement said.
Of GM’s 17 assembly plants in North America, too many are focused on building cars. But GM’s cars have failed to inspire American consumers in recent years, even as Subaru and some others are making headway. Looking at production cuts is the obvious and immediate solution for GM. But making cars that appeal to a larger number of consumers in the US, and marketing them successfully, is a much tougher job that GM doesn’t seem to be able to tackle.
Hurricane Harvey and the highest discounts in US history did the trick, and September was finally the month everyone had been waiting for. Read… Which Automakers Got Crushed, Which Boomed?