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GM To Close Four Truck Plants; Review possible Hummer Sale

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General Motors Corp. (GM) said it would close four North American plants, amid a steep drop in U.S. sales of pickup trucks and sport-utility vehicles and accelerate a push to introduce smaller passenger cars.

In an effort to save about $1 billion by 2010, GM said it will cease production at an Oshawa, Ontario, truck-assembly plant, in 2009; a Moraine, Ohio, SUV plant in 2010; and a Janesville, Wis., medium-duty truck plant by the end of 2009, if market demand dictates. GM also will close a Mexico medium-duty truck plant in 2008.

The auto maker also launched a strategic review of its Hummer brand, including its possible sale, and reaffirmed its commitment to funding production of the Chevy Volt electric vehicle.

GM also said it is adding third shifts at two car plants.

Chief Executive Rick Wagoner said the moves are "all in response to the rapid rise in oil prices and the resulting changes in the U.S., changes that we believe are more structural than cyclical. While some of the actions, especially the capacity reductions, are very difficult, they are necessary to adjust to changing market and economic conditions and to keep GM's U.S. turnaround on track and moving forward."

The announcement comes ahead of GM's vehicle sales for May, arriving later Tuesday.

Wagoner added that "from the start of our North American turnaround plan in 2005, I've said that our goal is not just to return GM to profitability, but to structure GM globally for sustained profitability and growth. Since the first of this year, however, U.S. economic and market conditions have become significantly more difficult," he said. "Higher gasoline prices are changing consumer behavior, and they are significantly affecting the U.S. auto industry sales mix."

Wagoner declined to say how many jobs will definitely be affected, but the number could be close to 10,000 according to an initial estimate he gave.

GM shares were up 2.1% in premarket trading to $17.80.

Sales of pickup trucks and big sport-utility vehicles - Detroit's bread-and- butter products - have been falling for the past few years, pulled down by the slumping economy, falling home values and rising gasoline prices. But the declines accelerated this year and showed an unexpectedly steep drop in May, as gasoline prices reached $4 a gallon in many parts of the country.

That forced GM and rival Ford Motor Co. (F) to slash truck production in the second half of the year. Ford also gave up its goal of returning to profitability in 2009 and has begun preparing to cut 2,000 white-collar jobs.

On May 22, Ford said it would cut third-quarter production 15% to 20%, to between 510,000 and 540,000 vehicles. It also announced a fourth-quarter production cut of 2% to 8%, to 590,000 to 630,000 vehicles.

GM's market share hit a record low of 20.5% in April, according to Autodata Corp. Given the direction of truck sales, GM is likely to report a drop in May sales large enough to pull its share below 20% - a once-unimaginable development.

Even if GM keeps its share above 20%, its declining position reflects a new competitive landscape in the U.S. In April, rival Toyota Motor Co. ™ had U.S. market share of 17.4% - a record for the company. May's sales totals could put Toyota within two or three percentage points of GM, with the market's trend favoring Toyota.

Toyota has already pulled even with GM in global vehicle sales. In the U.S., GM once dominated, selling half of all the new cars Americans bought. A decade ago, GM executives wore pins with the number 29, signifying their determination to hold share at 29%. In 2006, after a major overhaul of its pricing strategy, GM thought it had stabilized its share at 24%.


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Looks like they've already shuttered Moraine production; nothing was produced there in April. The announced production cuts by themselves in a 15M vehicle market (not including the medium-duty truck cuts) mean a loss of about 1 point of market share if increased Lordstown production doesn't sell.

The writing has been on the wall about oil prices for at least 6 years now. GM is a miserably run company.

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not surprising that GM is cutting back on trucks but isn't Oshawa one of their best plants?

if the Oshawa truck plant got any money as part of the Beacon project a few years back, I hope the Ontario gov goes after GM to get it back

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A reaction to Global market conditions that can be measured with an hour-glass! If GM were a ship heading for the iceberg, they would turn only AFTER the boat sank.

It is a shame to see my favorite company floundering this badly. Where has the leadership gone?

Hey GM, where are the ALTERNATIVE FUEL cars and trucks that the U.S. needs? Where is your forward thinking? You cannot tell me that all of your dreaming of the 50's and 60's died out and its gone FOREVER? COME ON! You have to have SOMETHING that we can see that shows us that you all did not have your heads so far up your asses that you did not see this coming! The consumer shift has been happening for well over a year, yet you just NOW think that selling Hummer MIGHT be a good idea? That is like trying to sell a house in Detroit right now...good luck! VOLT would be a great start...now let's see the Volt Pick-up and SUV in the works - NOW! BIO fuels and other renewable sources of fuel need to be on the front burner now...not 6 years from now. Show us that there is still some THINKING within GM, or it is over.

Sorry for the rant, guys and girls...but the constant bad news coupled with the strikes and other blows to this company really make me wonder why they even try any more. It is like trying to swim against the tide. Eventually you will just fail...and this is what has me worried.

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