• Sign in to follow this  
    Followers 0

    GM To Cut Back On Production As Inventory Is At An 8-Year High


    • How many vehicles does GM have sitting around?!

    General Motors is dialing back on production as it currently has too many vehicles in inventory. The Detroit News reports that General Motors at the end of November had 874,000 vehicles sitting around - a number that hasn't been seen since the 2008 financial crisis. Compared to the same time last year, the number of vehicles has increased by 182,000 units. More worrying is that compared to October, the number of unsold vehicles rose by 40,000.

    Despite strong sales, more consumers are going with crossovers, SUVs, and pickup trucks. GM even increased incentives on a number of models to help relieve this glut, all to no avail.

    According to Autodata, this is amount of passenger vehicles GM had sitting,

    • 110 day-supply of the Cadillac CT6
    • 119 day-supply of the Cadillac ATS
    • 121 day-supply of the Chevrolet Cruze
    • 132 day-supply of the Cadillac CTS
    • 168 day supply of the Buick LaCrosse
    • 170 day-supply of the Chevrolet Corvette and Spark
    • 177 day-supply of the Chevrolet Camaro

    Because of this, General Motors is cutting back on production at some of their plants. As we reported last month , GM is cutting a shift at their Lansing Grand River plant in Michigan (home to Cadillac ATS, CTS, and Chevrolet Camaro) and a shift at Lordstown, Ohio plant (home to the Chevrolet Cruze). General Motors will also be shutting down five plants according to Reuters in January. The plants include,

    • Detroit-Hamtramck (Three weeks)
    • Fairfax, KS (Three weeks)
    • Lansing Grand River (Two weeks)
    • Lordstown, OH (One week)
    • Bowling Green, KY (One week)

    Source: The Detroit News, Reuters

    0


    Sign in to follow this  
    Followers 0


    User Feedback




    Huh, and I thought it was just FCA cars losing ground and having big incentives because they were on old platforms and nothing to do with the CUV boom.  Who knew..........

    0

    Share this comment


    Link to comment
    Share on other sites
    27 minutes ago, Stew said:

    Huh, and I thought it was just FCA cars losing ground and having big incentives because they were on old platforms and nothing to do with the CUV boom.  Who knew..........

    Come on Stew. FCA is suffering from both issues and this is coming from an 8 year Magnum owner and an LX fan. They have problems that go beyond just CUVs or lack thereof. 

    0

    Share this comment


    Link to comment
    Share on other sites
    7 minutes ago, surreal1272 said:

    Come on Stew. FCA is suffering from both issues and this is coming from an 8 year Magnum owner and an LX fan. They have problems that go beyond just CUVs or lack thereof. 

    Not really.  the cars made in the plants that GM is idling have all not been the sales successes expected, especially the Alpha cars and the Omega CT6 already having issues?  Not good.  And Jeep is the highest selling CUV/SUV brand bar none. 

    0

    Share this comment


    Link to comment
    Share on other sites
    48 minutes ago, Stew said:

    Not really.  the cars made in the plants that GM is idling have all not been the sales successes expected, especially the Alpha cars and the Omega CT6 already having issues?  Not good.  And Jeep is the highest selling CUV/SUV brand bar none. 

    That does not take away from my original statement about FCA. For the record though, I do not disagree with the GM issues but it is easier to prove their losses are a result of the CUV craze than it is about the product itself. That is the difference between what is going on at GM and what is going on at FCA. The LX platform is two decades old and is in dire need of a shot in the arm but FCA seems content to hang it out to dry while making a bunch of empty promises about such. 

    1

    Share this comment


    Link to comment
    Share on other sites

    Well GM has a lot more options this time than back in 09. 

    The union deals that made them pay are gone. 

    Also many of the cars on the list have to be considered. The Enclave and Terrain are going into build out mode where they stock pile them as new models and lines are being made. This number is not suprising and the Terrain will move to classic mode with fleet sales taking care of the volume. 

    The Cruze had to get caught up and GM has worked 2-3 shifts. they will just go back to one and most of the people will just come off over time. 

    The Alpha has suffered mostly due to the changes at Cadillac and the Camaro price increase where people will wait it out for incentives. They have already done some and it helped. The real hurt is the declines in the coupe market. Even the Mustang has suffered greater sales declines. 

    Corvette has several issues. one it is winter and many are waiting to see what the C8 will bring. It is not far off. 

    But here is the real issue. The market is in decline for everyone. The companies that had prepared for it will survive pretty find. GM for the last few years has been working hard on SUV and CUV models as well as two truck lines to keep profits and volume up. They also have worked hard to increase ATP so even at lower volumes and with some incentives they will remain profitable. 

    They need to get the new Buick lines in place and star better marketing the Lacrosse. It is a big unknown out there and a really good car for the money. Cadillac is a write off for the next couple years but they will remain profitable even at lower volumes. 

    The key will be to see how they manage inventories from January to July. If they can work it well they will sell down with the auto shows coming but sales will decline but look for profits to remain in the black. 

    Holding many new products and larger volume products give so much more flexibility to work the market. 

     

    0

    Share this comment


    Link to comment
    Share on other sites

    That's a lot of newer GM product that is loitering around lots.  FCA has problems, but very little that new product can't solve.  GM's problems are scary.  

     

    And wow, CT6 is at 110 days already.  

    -1

    Share this comment


    Link to comment
    Share on other sites

    That's Too Much Cars!!!

     

    They need to cut production way back, I imagine the discounts will hit most of those cars come the winter months when sales tend to slow down even more.  But look at that list, luxury sedans and sports coupes.  Coupe sales are dropping everywhere, full size sedans dropping every where, and the ATS never really hit it, the Infiniti and Lexus counterparts outsell it with ease, let alone what the German leaders do. 

    GM also has to look at their brands, they are too car heavy.  Chevy has more sedans than crossovers, that makes no sense.  Cadillac has 1 crossover, they should have 4.  The market wants crossovers.  We enthusiasts like rear drive luxury sedans and sports cars, but the sheeple out there want tall wagons for their "active lifestyles" or some crap.

    0

    Share this comment


    Link to comment
    Share on other sites

     Well what are most of the new coming vehicles that are coming in the next years. All trucks and SUV/CUV models for the most parts. 

    Just the Equinox and Traverse will major impact the Chevy numbers alone. 

    The future will have to still have cars to meet CAFE so you have to keep them up and GM is not going to be stupid and ax their car lines like Chrysler did as they will be needed in the future.  But with that said slow models like the Impala and others could be at risk.  

    1

    Share this comment


    Link to comment
    Share on other sites

    I also think what is being missed here is GM can idle plants today where as in the past it was cheaper to keep them open and in production since they had to pay union members nearly full wage no matter if they worked or not. 

    Think about it GM never used to close much down other than the change over in June and July. Now they can do as others have done for years in production. One card that was never permitted to play before the bail out due to poorly structured contracts. 

    1

    Share this comment


    Link to comment
    Share on other sites
    11 hours ago, Wings4Life said:

    That's a lot of newer GM product that is loitering around lots.  FCA has problems, but very little that new product can't solve.  GM's problems are scary.  

     

    And wow, CT6 is at 110 days already.  

    Yeah, they should have moved thirty percent of their inventory to fleet like Ford did the first nine months of the year. Oh wait, Ford had to stop production on the F-150 and Mustang for a short time too not even two months ago. GM will be fine. 

    0

    Share this comment


    Link to comment
    Share on other sites

    813d5ec521149f91573e3c56ea86881c.jpg

     

    First this is a stock manipulator, failing to have a real effect. Interesting enough if U were smart enough to buy back in June.. U are now $10 per share richer

     

    Second... This does nothing in taking away from the greatness of any of the cars at any of the plants.. These are '17 models.. which will be the newest things out for the next 10 months before the '18s arrive. I'm tripping on how the usual suspects come into a thread claiming that suddenly a CAR is inferior because it has a supply abundance.. How about GM had a "I'm giving these workers some hours to help the economy and not lay-off during the Holidays" issue.

    Me??? If I were running Ford... and this came about (which it did but I'll get to that in a sec) I'd find Wingnuts specifically and say "Wings!!! GET THE $#$@  OUT!!! And Don't let the Door hit your fat A$$!!!" :angry::P As I told other workers.. "hate that guy..."

    Bottom line is that GM idle the CAR plants because lets face it.. cars are the secondary transportation units these days. Not including SUVS.. CUVs have accounted for 5.1 Mil while cars in the MID-SIZE sold 3 Mil, LARGE and Lux cars sold 900K  and Compacts sold 2.6 Mil. This means CUVs have dwarfed all three of the car categories individually 

     

    Oh... Didn't Ford just, lil over a month ago idle its Wayne plant because of light demand for the Focus and Cmax.. then idle the Kentucky and Mexico plants that makes the Escape and MKC?? Also.. they idled Kansas City for overproducing the mighty F150!!!  Yes.. the did: THE YES THE DID LINK :lol: and another: The F150 on SOFT DEMAND LINK

    Stew.. I won't even comment on anything going on over at FCA.. Its just too effin sad to speak about:o

    1

    Share this comment


    Link to comment
    Share on other sites

    I can pretty well guarantee you will see cars come back to Dodge dealerships.  I see no problem with them outsourcing for their midsize and compacts, as something GM did with Toyota and Ford with Mazda.  The fact is that right now it is more important for them to fill their portfolios with what sells and that is SUV/CUVs.  Let's be honest here.  The importance o the Dart was not sales or even longevity in the marketplace.  It was a tool that they used to get over the 40 MPG barrier that allowed Fiat to purchase more of Chrysler.  The 200 was actually a nice car, it just needed tweaked which could have happened with a nice MCE, but the plant space right now is better used for more profitable trucks (much as GM did when they killed the B-bodies in 96 and replaced them with fullsize trucks in the factory).  The problem here is like wins said, that is a lot of newer product on newer platforms to be stopping the factories on.  We will see the LX replacements because their usage of the new Alfa platform has to happen to make it financially viable, as much as the Camaro is the price leader for the Alpha range.  Honestly, with their more complete SUV/CUV ranges FCA, Ford, and Toota are in some of the best positions right now to give people what they want. 

    0

    Share this comment


    Link to comment
    Share on other sites

    I will say i become more convinced everyday that Cadillac needs to work on heir quality.  My brother's ATS at less than 10k miles has already had to have the entire CUE head-unit replace and some features such as the lighted entry, only work sometimes.  He has also had to have the PCM flashed for rough idling.  Add to that the fact that for courtesy cars he always gets Impala Limiteds where as the Audi dealership had A3s and Q5s as their loaners.   If Cadillac wants to be taken seriously they really need to work out the bugs and get WAY moe serious about their dealership experience. 

    0

    Share this comment


    Link to comment
    Share on other sites
    31 minutes ago, Stew said:

    Add to that the fact that for courtesy cars he always gets Impala Limiteds where as the Audi dealership had A3s and Q5s as their loaners. 

    I think this is actually a huge issue. While it isn't such a huge deal.. it is at the same time. You don't loan somebody who's spent 40-100k on a Cadillac a Chevy Impala or Chevy anything.

    0

    Share this comment


    Link to comment
    Share on other sites
    50 minutes ago, Cmicasa the Great said:

    813d5ec521149f91573e3c56ea86881c.jpg

     

    First this is a stock manipulator, failing to have a real effect. Interesting enough if U were smart enough to buy back in June.. U are now $10 per share richer

     

    Second... This does nothing in taking away from the greatness of any of the cars at any of the plants.. These are '17 models.. which will be the newest things out for the next 10 months before the '18s arrive. I'm tripping on how the usual suspects come into a thread claiming that suddenly a CAR is inferior because it has a supply abundance.. How about GM had a "I'm giving these workers some hours to help the economy and not lay-off during the Holidays" issue.

    Me??? If I were running Ford... and this came about (which it did but I'll get to that in a sec) I'd find Wingnuts specifically and say "Wings!!! GET THE $#$@  OUT!!! And Don't let the Door hit your fat A$$!!!" :angry::P As I told other workers.. "hate that guy..."

    Bottom line is that GM idle the CAR plants because lets face it.. cars are the secondary transportation units these days. Not including SUVS.. CUVs have accounted for 5.1 Mil while cars in the MID-SIZE sold 3 Mil, LARGE and Lux cars sold 900K  and Compacts sold 2.6 Mil. This means CUVs have dwarfed all three of the car categories individually 

     

    Oh... Didn't Ford just, lil over a month ago idle its Wayne plant because of light demand for the Focus and Cmax.. then idle the Kentucky and Mexico plants that makes the Escape and MKC?? Also.. they idled Kansas City for overproducing the mighty F150!!!  Yes.. the did: THE YES THE DID LINK :lol: and another: The F150 on SOFT DEMAND LINK

    Stew.. I won't even comment on anything going on over at FCA.. Its just too effin sad to speak about:o

    This thread is not about Ford, it's about GM's huge glut of product sitting on lots.

    -1

    Share this comment


    Link to comment
    Share on other sites
    6 minutes ago, ccap41 said:

    I think this is actually a huge issue. While it isn't such a huge deal.. it is at the same time. You don't loan somebody who's spent 40-100k on a Cadillac a Chevy Impala or Chevy anything.

    Yes, with a luxury car the dealership experience is very important.  Even the showroom itself is important.  The Audi dealership was high class with wood floors and warm tones everywhere and at least one example of every model they offer in the interior showroom for you to browse (I am such a kid just sitting in a new R8 gave me a hue smile).  he Chevy/Cadillac dealership is all white, white walls, white floors, flimsy seats, in other words nothing special.  Cadillac needs their own showrooms period. 

    1

    Share this comment


    Link to comment
    Share on other sites
    15 minutes ago, Stew said:

    Yes, with a luxury car the dealership experience is very important.  Even the showroom itself is important.  The Audi dealership was high class with wood floors and warm tones everywhere and at least one example of every model they offer in the interior showroom for you to browse (I am such a kid just sitting in a new R8 gave me a hue smile).  he Chevy/Cadillac dealership is all white, white walls, white floors, flimsy seats, in other words nothing special.  Cadillac needs their own showrooms period. 

    You do know that Cadillac is addressing that very issue with their dealerships right? They are pairing (closing) the smaller market dealerships down and updating and renovating the rest. This has been well addressed here before. 

    -1

    Share this comment


    Link to comment
    Share on other sites
    51 minutes ago, Stew said:

    I will say i become more convinced everyday that Cadillac needs to work on heir quality.  My brother's ATS at less than 10k miles has already had to have the entire CUE head-unit replace and some features such as the lighted entry, only work sometimes.  He has also had to have the PCM flashed for rough idling.  Add to that the fact that for courtesy cars he always gets Impala Limiteds where as the Audi dealership had A3s and Q5s as their loaners.   If Cadillac wants to be taken seriously they really need to work out the bugs and get WAY moe serious about their dealership experience. 

    On the loaner service.. don't kno.. My dealerships ( I usually deal with one here in Balto.. but a different one when I'm at my Voorhees home) always.. and I mean always have a in stock Loaner. A few years ago they were using Enterprise tho, but that was before 2009. About a month ago I had to take my V in for an Oil change etc and they gave me '17 XTS4 with like 300 miles on her. It was a Premium Luxury VSport. I asked for a CT6 or even a Platinum VSport XTS, but they couldn't. Point is that it may be the dealership. 

     

    0

    Share this comment


    Link to comment
    Share on other sites
    1 minute ago, Cmicasa the Great said:

    On the loaner service.. don't kno.. My dealerships ( I usually deal with one here in Balto.. but a different one when I'm at my Voorhees home) always.. and I mean always have a in stock Loaner. A few years ago they were using Enterprise tho, but that was before 2009. About a month ago I had to take my V in for an Oil change etc and they gave me '17 XTS4 with like 300 miles on her. It was a Premium Luxury VSport. I asked for a CT6 or even a Platinum VSport XTS, but they couldn't. Point is that it may be the dealership. 

     

    Which is another issue onto itself.  All dealerships should be offering a premium experience.

    4 minutes ago, surreal1272 said:

    You do know that Cadillac is addressing that very issue with their dealerships right? They are pairing (closing) the smaller market dealerships down and updating and renovating the rest. This has been well addressed here before. 

    Last i saw this was on hold because of push back from the dealerships?

    0

    Share this comment


    Link to comment
    Share on other sites
    28 minutes ago, ccap41 said:

    I think this is actually a huge issue. While it isn't such a huge deal.. it is at the same time. You don't loan somebody who's spent 40-100k on a Cadillac a Chevy Impala or Chevy anything.

    Again.. its a dealership thing. Also.. realize that had they given me an Impala I would have had ZERO issue even after spending $100K on my Caddy. Quite frankly they didn't even have to offer a loaner as my issue wasn't an issue for them but an issue that I created when I booked the appointment with them.. but had double-booked an appoint with a client at the same time. The Impala is a pretty nice place to be these days.. Ironically the Chevy dealership give me a Camaro when I had to take my Stingray in for a recall. It was a V6 but that thing was SWEET:D 

    0

    Share this comment


    Link to comment
    Share on other sites
    3 minutes ago, Stew said:

    Which is another issue onto itself.  All dealerships should be offering a premium experience.

    Last i saw this was on hold because of push back from the dealerships?

    Of course there wil be some push back but its going to happen whether the weak dealerships like it or not. It also doesn't change my original point. 

    0

    Share this comment


    Link to comment
    Share on other sites
    Just now, Cmicasa the Great said:

    Again.. its a dealership thing. Also.. realize that had they given me an Impala I would have had ZERO issue even after spending $100K on my Caddy. Quite frankly they didn't even have to offer a loaner as my issue wasn't an issue for them but an issue that I created when I booked the appointment with them.. but had double-booked an appoint with a client at the same time. The Impala is a pretty nice place to be these days.. Ironically they give me a Camaro when I had to take my Stingray in for a recall. It was a V6 but that thing was SWEET:D 

    But you only buy GM and have experience with Caddy dealerships.  If you are coming from an Audi, Benz, or even a Lexus the dealership experience is going to be a major downgrade and will certainly effect your opinion of owning the brand as a whole. 

    1

    Share this comment


    Link to comment
    Share on other sites
    6 minutes ago, surreal1272 said:

    Of course there wil be some push back but its going to happen whether the weak dealerships like it or not. It also doesn't change my original point. 

    The longer it takes, the worse it will be.  this change should have been made decades ago. 

     

    Edit:

    Looks like the have actually delayed it 2 times already

     

    http://www.wsj.com/articles/cadillac-delays-controversial-dealership-plan-1479920782

    0

    Share this comment


    Link to comment
    Share on other sites

    The elephant in the room is the fact that it is the cars that are not selling, because customers demand more CUV's, and GM is slow to adjust to customer demand.  Cadillac currently has 1 CUV, when they should have at lest 3, currently

    1

    Share this comment


    Link to comment
    Share on other sites
    6 minutes ago, Stew said:

    The longer it takes, the worse it will be.  this change should have been made decades ago. 

     

    Edit:

    Looks like the have actually delayed it 2 times already

     

    http://www.wsj.com/articles/cadillac-delays-controversial-dealership-plan-1479920782

    Well duh Stew but this is now and they are working on it, much how FCA has been "working on" replacing the aging LX lineup for what seems like decades. 

     

     And again, of course there will be blowback and of course certain media outlets have to make a bigger deal out of this than it is but it is going to happen regardless, for the benefit of the consumer, which is supposed to be the ultimate goal anyway. 

    0

    Share this comment


    Link to comment
    Share on other sites



    Your content will need to be approved by a moderator

    Guest
    You are commenting as a guest. If you have an account, please sign in.
    Add a comment...

    ×   You have pasted content with formatting.   Remove formatting

      Only 75 emoticons maximum are allowed.

    ×   Your link has been automatically embedded.   Display as a link instead

    ×   Your previous content has been restored.   Clear editor




  • Popular Stories

  • Today's Birthdays

    1. Northstar
      Northstar
      (29 years old)
    2. redfox
      redfox
      (74 years old)
  • Similar Content

    • By William Maley
      Last week saw the PSA Group (parent company of Citroen and Peugeot) purchasing Opel and Vauxhall from General Motors for $2.3 billion. This move would make the PSA Group the second-largest automaker in Europe. We already know some of the plans that PSA Group has for their new brands such as setting operating profit targets of 2 percent in 2020 (jumps to 6 percent by 2026) and the next-generation Opel/Vauxhall Corsa being the first new product developed with PSA. But as we alluded to in the original news story, there are a lot of questions that remain unanswered such as possible job cuts or what happens to Buick and Holden as they share products with Opel. I have been doing a bit of thinking on these and some other questions. The end result is this piece.
      1: Will there be job cuts and plant closures?
      In 2016, PSA Group employed 172,000 people worldwide. With the acquisition of Opel and Vauxhall, they will be adding close to 42,000 workers (the majority of those from Opel). The number of plants will also increase to 28 due to this purchase. Sooner or later, PSA Group is going have to make cuts. During the press conference announcing the deal, PSA Group CEO Carlos Tavares said the company “would honor existing labor agreements and closing plants is a “simplistic” solution.” That may be true for now, but this might change within the coming years. Some analysts believe PSA Group will close two to three plants within five years.
      The most likely place where the closures and layoffs could take place is in Great Britain. The reason as we talked about in a story back in February deals with the decision made by British citizens last year with leaving the European Union.
      “By leaving, the country would lose access to the EU Single Market which guarantees unconstrained trade across the member states. It would mean various countries would be leveraging tariffs on British-made goods, making production in the country less competitive.”
      Former British member of parliament and business secretary Sir Vincent Cable outlined how bad this decision looks for Vauxhall in a recent interview on BBC Radio 4.
      There could be a way that the British Government could at least stall the possible closures. Back in October, the British Government worked out a secret deal with Nissan to keep them investing in British car production at their plant in Sunderland. This deal caused an uproar as the details were kept as many believed the British Government would be handing over money to keep Nissan happy. But sources told British newspaper The Independent back in January that the deal had no mention of money.
      It could be that the British Government could do something similar for PSA Group to keep jobs, but it is too early to say if this will happen or not.
      2: Will this affect PSA’s plans of entering the U.S.?
      Probably not. Let’s remember that PSA Group is working through a ten-year plan that may or may not see the return of the Citroen and Peugeot, along with the introduction of DS to the country. Already, the first part of this plan is gearing up for the launch of a car sharing service next month. There is also extensive research going on into the U.S. marketplace. 
      But could there be a possibility of Opel or Vauxhall vehicles being sold here? It would not be surprising if there isn’t talk about this at PSA Group’s HQ. But there is a slight complication to this idea. As part of the sale, PSA Group cannot sell any Opel vehicles developed by GM anywhere in various markets outside of Europe (China and U.S. for example) until they transition to PSA platforms. That means a number of models such as the Astra, Insignia, and Mokka are out of the question for the time being. If Opel was chosen to be one of the brands PSA would sell in the U.S., they might not have a full line of vehicles to sell due to this clause.
      3: What does the future hold for Buick and Holden?
      If there are some losers from the sale of Opel, it has to Buick and Holden. Buick has found some success with Opel products as the Encore (rebadged Mokka) has become one the best-selling models for the brand. Holden is getting a shot in the arm as the Astra will hopefully help their fortunes in the compact space, and the new Commodore (rebadged Insignia) has a tough task ahead of it with living up to an iconic name. For the time being, Opel will continue supplying models to both brands. It is what happens in the future that many are concerned about.
      During the Geneva Motor Show, GM President Dan Ammann said something very interest to Australian journalists about the future of Holden’s products.
      This makes sense as the Astra was only launched and the Commodore is getting ready to go on sale. But I wouldn’t be surprised if talks begin very soon about this very topic. The same talks are likely to begin at Buick soon where they face the same issue for the Regal and Encore. Our hunch is Buick might have the easier time of two. The Encore would continue on since it shares the same platform as the Chevrolet Trax. As for the Regal, it could leave Buick’s lineup once the next-generation model runs its course.
      4: Does GM lose anything with this deal?
      There has been a lot of talk about how much money will be freed up from the sale of Opel/Vauxhall for GM, along with making a bit more profit. But it comes at a cost that could hurt GM down the road. The recent crop of compact and midsize sedans from GM owe a lot to Opel’s engineering knowledge. Vehicles that excel in driving dynamics and fuel economy are worth their weight in gold when it comes to the European marketplace. As we know, one part of why GM went into bankruptcy was the lack of competitive small and midsize cars that got good fuel economy. Opel would prove to be GM’s savior with this key knowledge.
      Right now, compacts and midsize sedans aren’t selling as consumers are directing their attention to crossovers and SUVs. This is due in part to lower gas prices. But sooner or later, the price of gas will go back up and cause many to go back to smaller vehicles. With talk about GM scaling back on their small and midsize car lineup, this decision could have consequences down the road. Plus with Opel out of the picture, GM doesn’t have someone it can rely on to get these models back to the forefront. We can hope GM’s North American office has learned some stuff when working with their European counterparts.
    • By William Maley
      Last week saw the PSA Group (parent company of Citroen and Peugeot) purchasing Opel and Vauxhall from General Motors for $2.3 billion. This move would make the PSA Group the second-largest automaker in Europe. We already know some of the plans that PSA Group has for their new brands such as setting operating profit targets of 2 percent in 2020 (jumps to 6 percent by 2026) and the next-generation Opel/Vauxhall Corsa being the first new product developed with PSA. But as we alluded to in the original news story, there are a lot of questions that remain unanswered such as possible job cuts or what happens to Buick and Holden as they share products with Opel. I have been doing a bit of thinking on these and some other questions. The end result is this piece.
      1: Will there be job cuts and plant closures?
      In 2016, PSA Group employed 172,000 people worldwide. With the acquisition of Opel and Vauxhall, they will be adding close to 42,000 workers (the majority of those from Opel). The number of plants will also increase to 28 due to this purchase. Sooner or later, PSA Group is going have to make cuts. During the press conference announcing the deal, PSA Group CEO Carlos Tavares said the company “would honor existing labor agreements and closing plants is a “simplistic” solution.” That may be true for now, but this might change within the coming years. Some analysts believe PSA Group will close two to three plants within five years.
      The most likely place where the closures and layoffs could take place is in Great Britain. The reason as we talked about in a story back in February deals with the decision made by British citizens last year with leaving the European Union.
      “By leaving, the country would lose access to the EU Single Market which guarantees unconstrained trade across the member states. It would mean various countries would be leveraging tariffs on British-made goods, making production in the country less competitive.”
      Former British member of parliament and business secretary Sir Vincent Cable outlined how bad this decision looks for Vauxhall in a recent interview on BBC Radio 4.
      There could be a way that the British Government could at least stall the possible closures. Back in October, the British Government worked out a secret deal with Nissan to keep them investing in British car production at their plant in Sunderland. This deal caused an uproar as the details were kept as many believed the British Government would be handing over money to keep Nissan happy. But sources told British newspaper The Independent back in January that the deal had no mention of money.
      It could be that the British Government could do something similar for PSA Group to keep jobs, but it is too early to say if this will happen or not.
      2: Will this affect PSA’s plans of entering the U.S.?
      Probably not. Let’s remember that PSA Group is working through a ten-year plan that may or may not see the return of the Citroen and Peugeot, along with the introduction of DS to the country. Already, the first part of this plan is gearing up for the launch of a car sharing service next month. There is also extensive research going on into the U.S. marketplace. 
      But could there be a possibility of Opel or Vauxhall vehicles being sold here? It would not be surprising if there isn’t talk about this at PSA Group’s HQ. But there is a slight complication to this idea. As part of the sale, PSA Group cannot sell any Opel vehicles developed by GM anywhere in various markets outside of Europe (China and U.S. for example) until they transition to PSA platforms. That means a number of models such as the Astra, Insignia, and Mokka are out of the question for the time being. If Opel was chosen to be one of the brands PSA would sell in the U.S., they might not have a full line of vehicles to sell due to this clause.
      3: What does the future hold for Buick and Holden?
      If there are some losers from the sale of Opel, it has to Buick and Holden. Buick has found some success with Opel products as the Encore (rebadged Mokka) has become one the best-selling models for the brand. Holden is getting a shot in the arm as the Astra will hopefully help their fortunes in the compact space, and the new Commodore (rebadged Insignia) has a tough task ahead of it with living up to an iconic name. For the time being, Opel will continue supplying models to both brands. It is what happens in the future that many are concerned about.
      During the Geneva Motor Show, GM President Dan Ammann said something very interest to Australian journalists about the future of Holden’s products.
      This makes sense as the Astra was only launched and the Commodore is getting ready to go on sale. But I wouldn’t be surprised if talks begin very soon about this very topic. The same talks are likely to begin at Buick soon where they face the same issue for the Regal and Encore. Our hunch is Buick might have the easier time of two. The Encore would continue on since it shares the same platform as the Chevrolet Trax. As for the Regal, it could leave Buick’s lineup once the next-generation model runs its course.
      4: Does GM lose anything with this deal?
      There has been a lot of talk about how much money will be freed up from the sale of Opel/Vauxhall for GM, along with making a bit more profit. But it comes at a cost that could hurt GM down the road. The recent crop of compact and midsize sedans from GM owe a lot to Opel’s engineering knowledge. Vehicles that excel in driving dynamics and fuel economy are worth their weight in gold when it comes to the European marketplace. As we know, one part of why GM went into bankruptcy was the lack of competitive small and midsize cars that got good fuel economy. Opel would prove to be GM’s savior with this key knowledge.
      Right now, compacts and midsize sedans aren’t selling as consumers are directing their attention to crossovers and SUVs. This is due in part to lower gas prices. But sooner or later, the price of gas will go back up and cause many to go back to smaller vehicles. With talk about GM scaling back on their small and midsize car lineup, this decision could have consequences down the road. Plus with Opel out of the picture, GM doesn’t have someone it can rely on to get these models back to the forefront. We can hope GM’s North American office has learned some stuff when working with their European counterparts.

      View full article
    • By William Maley
      General Motors seems being in a cutting mood as it drives to improve its profit margins and stock price. Last week saw the sale of Opel and Vauxhall to PSA Group and it's only the beginning said GM CEO Mary Barra.
      Automotive News reports that GM is considering reducing investments in North American cars and "select" international markets according to a chart that was shared during a conference call with analysts last week. The chart says these two earned a spot on the chopping block due to low profit potential and weak strength in franchises.
      "There's a little bit more work that we're doing in the international markets. Our overall philosophy is that every country, every market segment has to earn its cost of capital," Barra said on the conference call. 
      Barra and GM President Dan Ammann declined to go into details about these plans.
      GM has already made significant changes in terms of their international operations by ending or reducing operations Australia, Indonesia, Russia, and Thailand. The automaker has also scaled back plans in India. The comments made during the call suggest more cuts could take place here and possibly elsewhere.
      As for 'reducing investments in North American cars', this likely means GM is taking a hard look at various segments in passenger car segment. With consumers trending towards utility vehicles and trucks, sales of passenger cars have been falling precipitously. As of March 1st, dealers had four month's worth of inventory of cars, compared to an 81-day supply for light trucks and less than 60-days for full-size SUVs. GM could walk away from certain segments such as compacts or full-size sedans, or delay investments in certain models.
      These moves will allow GM to funnel money into models that make more money, and returning capital to shareholders.
      "That's an immediate opportunity for us to reward shareholders without changing the risk profile of the company or our ability to manage through a downturn," GM CFO Chuck Stevens said.
      Analysts are mixed on GM's plans.
      "It takes a lot of discipline to shift away from a volume-is-king kind of mentality," she said. "In the end, that's going to make a better GM -- a longer-standing company that's not only more profitable but more relevant," said Rebecca Lindland, a senior analyst with Kelley Blue Book to Automotive News.
      John Murphy, an analyst with Bank of America Merrill Lynch isn't so sure about this plan.
      "It appears that GM's recent decision-making has become much more short-term-focused and, in our opinion, could create challenges for the company in the coming years," Murphy wrote in a report.
      Source: Automotive News (Subscription Required)

      View full article
  • Recent Status Updates

  • Who's Online (See full list)