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GM Takes Drastic Action, Announces Record Production Cutbacks


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"Reeling from a 41 percent drop in its November U.S. sales," says Automotive News, and not quite sure where the money to stay afloat will come from after yesterday's rejection of the domestic auto bailout deal, GM will cut about 30 percent of its North American production capacity during the first quarter of 2009. That's a drop of about 250,000 vehicles compared to Q1 2008 according to The Detroit News, and a total Q1 production target less than that of rival Ford, a company that's historically been outsold by GM. Ford plans Q1 production of 430,000 vehicles.

In Michigan alone, six plants will be affected. Flint Assembly (Chevrolet Silverado, GMC Sierra), the Delta Township plant in Lansing (Lambda Crossovers), Pontiac Assembly (Chevrolet Silverado, GMC Sierra), Lansing Grand River (Cadillac STS, Cadillac CTS), Orion Township (Chevrolet Malibu, Pontiac G6), and Detroit-Hamtramck (Buick Lucerne, Cadillac DTS). Had car sales and the economy not tanked, GM would have been on target to produce about 750,000 vehicles during the first quarter of 2009. GM will also be temporarily shutting down at least 20 plants in the U.S., Mexico, and Canada.

The Detroit News sums up GM's massive struggle: a loss of nearly $73 billion since 2004; a 22 percent drop in U.S. sales for 2008; a lack of available credit, low consumer confidence, and the rising unemployment that's killing new car sales. All GM divisions have reported 20-plus percent sales declines for 2008, and industry demand for new vehicles has dropped about 16 percent. That's the lump of coal in the stockings of American auto workers, Big Three execs, and domestic dealers across the country this Christmas.

Said GM spokesman Chris Lee: "This is unprecedented...the market has tanked."--Colin Mathews
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Comments (3)
  1. The cutbacks are absolutely necessary. Gm and the other incompetents in Detroit always had much larger inventories, even in Good times, than Toyota or BMW or Honda or esp. lexus.
    These large inventories cost them BILLIONS AND BILLIONS in lost interest.
    Back then, they had 60-70 days inventory, when Toyota had 20-30. Now they have 120 and 240 and for some models like the Pontiac Solstice (once popular convertible) they have 360 (A WHOLE YEAR!!) days of inventory!
    That obviously cannot continue.
    If they can find a BUYER for some of their plants, this would be a far better solution than keep them closed half the time.
     
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  2. Ed, no one is buying cars, not just not buying Detroit 3 cars, everyone is downa nd long time before they recover, unfortunately only option is to shut them down for long periods, reduce shifts etc. US is porbably 2 to 3 years away from getting out of recession (new depression?) years and years of living off debt, betting on the stock market and land prices going up and up. It was bound to happen. Now us has excess production capacity, excess housing capacity and debts so high almost no one can afford to spend.
    You will start to see Honda, Toyota and the others also shutting down production for long periods as their stockpiles rise too.
     
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  3. The fat cats of the big 3 have been greedy for too long! The UAW as well, while it may effect many others outside the carmakers circle, it is necessary not to facilitate any further gorging! At what point would it end? Many carmakers have gone out of business in history and guess what we are still here and the end of the world has not come. apparently Chrysler did not learn its lesson from the bail out of 79 and should be left to lie in the bed it made. The Uaw nor the execs. want to take total responsibility..wow thats a surprise. Reminds me of myself as a child when I broke a window, but in the end I was punished and so should these execs as well as UAW. I personally owned a few domestic vehicles and would never ever go back to owning one again. Henry Ford and the other forefathers of automobiles are probally rolling in their graves at the news of the mess the auto execs have brought upon them selves.
     
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