General Motors Corp (NYSE: GM) eliminated overtime at six of its North American SUV and pickup assembly plants for 2007, citing fuel prices and the competitive market. Spokesman Tom Wickham said the automaker cut production to manage its inventory levels, according to the Detroit Free Press.The move by General Motors hints that the auto industry is moving towards a "longer and more painful downturn in the U.S. than many had expected," according to the Wall Street Journal.
What's baffling is that GM, as well as the WSJ, didn't see this coming any earlier. SUV and truck sales for General Motors were down 9% over the first seven months of the year. Auto sales were surprisingly weak in June and even worse in July for the whole industry. Add the weak housing environment, the current credit market debacle, the ever rising price of oil and the global demand for hybrid technology to the mix and one has to question who didn't see this coming.
- Goldman Sachs called GM's 2007 outlook "uninspiring" on March 15, as deteriorating pricing and volumes will remain a persistent headwind for the automaker.
- Toyota Motor Corp (NYSE: TM) claimed the title "world's biggest carmaker" back in April from General Motors.
- Prudential said on May 17 that GM and Ford Motor Co (NYSE: F) could face increased competition with Chrysler being more likely to make the turnaround more quickly.
- Last month, the Detroit News reported that General Motors will double the incentives on its new full size pickups and even pay six months of lease payments for others, just to get them off the lot.
- Scott Frew, manager of hedge fund Rockingham Capital Partners, told Barron's (subscription required) earlier this month that he predicts GM will to go into bankruptcy.
One GM executive that actually did see this coming: Bob Lutz. At the Geneva auto show in March, the Detroit News reported Lutz commenting during an interview that market conditions are conspiring to eliminate one of the 'Big Three' down the road.
The Wall Street Journal reported that as recently as May, General Motors predicted second half vehicle sales would improve. At the start of August, GM finally lowered its forecast for industry-wide vehicle sales, acknowledging there would not be an improvement. Yesterday, GM cut production. If the executives of GM don't open their eyes, and quickly, Bob Lutz's words might come true -- for General Motors.
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Reader Comments (Page 1 of 1)
8-24-2007 @ 9:09AM
Brian said...
The American car manufacturers deserve what they are getting. We need new technology, improved diesel for cars, hybrids and pure electric vehicles. The car makers have ignored all these needs and refused to even try to look to the future. They insist on doing the same thing over and over again.
Why do hybrids use a gasoline engine? When will they figure out that a hybrid with a diesel engine that runs on biodiesel would be the ultimate next generation vehicle. The travel distance of internal combustion, use a renewable fuel source and decrease emissions with the hybrid technology.
Who is running these companies? Let them fold. New manufacturers will replace them with the technology we need and end up employing those that lose their jobs. No government bailout. Darwinism in the marketplace is needed to weed out the weak and the dumb.
8-24-2007 @ 6:56PM
Al said...
The writer of the above article is another bias ignoramus. He could not give just a little credit to all the great products GM has come out with recently. There are many other great products soon to come out. Just put a google search and find out.
8-24-2007 @ 11:20PM
Jerry said...
I must agree with Al's comments re: GM's great products. The ongoing turnaround at GM makes clear that they have "gotten the message". What will determine the winners and losers in the automotive market today is product, product, product...as Lutz has stated. Toyota and others (Honda) deserve their reputation for quality...they've stood and delivered it for years. And I admit you can criticize GM for its PAST quality & product shortcomings...but don't knock them for their quality or product performance TODAY. They are in the top echelon re: initial & 3-yr quality, and in my humble opinion, have vehicles with personality and charisma (e.g. Pontiac Solstice, Corvette Z06, Cadillac CTS, Buick Enclave, Saturn Sky, GMC Sierra, Volt concept, etc.). With the greatest respect to those who disagree, I challenge you to try one of GM's competitive products next time you're in the market for a new vehicle. GM's no slouch anymore...they are world class and getting better.
BTW, these comments from a guy whose daily driver is a BMW M3...and I love it. But make no mistake, I plan to test drive GM next time I'm in the market...'cause as a Sr Drivetrain Engineer for major off-highway company, I'm not settling for anything but the best for my money.
8-27-2007 @ 7:28PM
A D said...
GM may have increased incentives on trucks but still Toyota has more on the Tundra. But since they can't keep the engine from blowing up they have to pay a lot to get a sucker to buy it. Every single 5.7 Tundra was recalled to have the engine replaced, all of them.
Guess the blogger that wrote this crap doesn't care to see the truth.