GM Schedules Additional Plant Downtime Amid Soft Sales, Inventory Glut, Union Officials Say
June 14 2017 - 10:03AM
Dow Jones News
By Mike Colias
General Motors Co. will extend the typical summer shutdown at
certain U.S. factories to deal with slumping sales and bloated
inventory, a sign the industry's hot streak is grinding to a
halt.
The No. 1 U.S. auto maker in terms of sales will idle its
Chevrolet Malibu factory near Kansas City for five weeks starting
in late June, Vicky Hale, president of the United Auto Workers
Local 31, said. Job cuts will be needed if GM is forced to slow
assembly-line speeds when those workers return.
Additional downtime is also slated in Lordstown, Ohio, a
small-car factory already stung by deep layoffs related to a
pullback in demand for passenger cars. A GM spokesman declined to
comment on specific plans.
Auto makers traditionally schedule two-week factory breaks in
mid summer, often to prepare for model changeovers. The pace of car
sales, however, is slipping after seven years of record sales and
most major car companies have responded by curtailing output ahead
of summer months that usually are the busiest for the industry.
Ford Motor Co. has also announced production slowdowns at
certain plants. While Ford's trucks are selling at a brisk pace,
its sedans are growing increasingly unpopular as gasoline prices
remain low.
GM enters the summer with a glut of unsold inventory after
running production lines at relatively high rates to prepare for
factory downtime related to plant upgrades. WardsAuto.com estimates
GM's production increased 2.9% over the first four months of 2017,
even as the broader industry pulled back.
As a result, GM's inventory spiked 43.5% at end of May compared
with the prior year. It has nearly 1 million vehicles sitting on
dealer lots, WardsAuto.com estimates, representing 101 days' worth
of supply, or 23.4% of total industry stock.
GM's holds about 17% market share. It is emerging from a tough
May when Ford -- traditionally the No. 2 seller -- took a rare lead
in the overall market due to its strong truck sales.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
June 14, 2017 09:48 ET (13:48 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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