As Doug wrote on yesterday, General Motors Corp. (NYSE: GM) again reduced plans for truck production for the third time in the last month and a half yesterday, which tells me that the road ahead for the automaker in one of its most profitable vehicle lines is not going to be smooth at all. The automaker already told the world about reducing production at six U.S. plants, and now newly stoked fears about a slowing U.S. economy has the automaker in a whirlwind about possible truck excess inventory. How is one of GM's best-selling lines just sitting idle on dealer lots across the nation?
It's like this: demand creeps downward and the automaker reduces production in order to balance existing and in-work inventory with dealer sales expectations. Nothing new there -- but in this case, it's a staple of GM's entire lineup, not some odd-designed passenger car that did not take off with consumers. Did GM just try to stuff the dealer channel with more profitable vehicles here, and it finally caught up with them? Is the company's truck marketing failing somehow? To see GM's idle truck-building capacity like this is very strange.
Let's go further: does GM continually see U.S. truck sales declining over the next few years? While rightsizing is probably the correct thing to do here to some extent, where is the slack demand for pickups falling? To the competition's trucks or to larger cars and SUVs? That question depends on whether GM sees retail or fleet sales dropping (or both). Once the conference call to cover August U.S. sales happens next week after the holiday, we'll form a better picture then on what is inside GM's thinking here. I'll be liveblogging it this Tuesday at 2pm EST, so stay tuned to BloggingStocks at that time.
General Motors (GM) signals even more truck production cuts
Posted Aug 31st 2007 1:18PM by Brian White
Filed under: Bad news, General Motors (GM)
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Reader Comments (Page 1 of 1)
9-01-2007 @ 12:58PM
Gumby said...
I dont think most pickup owners really need them. If they need one, they can rent it at Hertz or Avis to haul lumber and stuff for their home improvements. Most contractors dont need pickups, neither. It is silly to own a pickup with a big V8. I guess we can own smaller pickups with 4 cylinders and that is it. NO V6 unless it is less than 2.5 liter not 3.0 or 3.6 liter V6 which is silly too... I often buy a few things and put it in my smaller pickup which does the job fine and save gasoline! GM and Ford did the Big Oil a huge favor by driving up oil demands unneedlessly. The rest of us are happy with gas misers and trying to get gasloline price down with reduced demand only to see gasoline being wasted away by those rednecks driving empty 12 mpg V8 pickups and SUVs. Home Depot can rent pickups. We can leave cars at Home Depot parking and drive rented pickups and bring cars back home after that. We dont need to drive pickups around empty 99% of the time. Pickups is for hauling stuff not a few empty cans and cigarette butts.
8-31-2007 @ 10:01PM
A D said...
Is this a GM problem or is it a problem with poltics that is completely out of whack?
When some states are throwing billions at foreign corporations to build assembly plants via tax breaks and sweetheart building sites you really have to wonder how a nation has allowed itself to have it's manufacturing base looted to benefit a few senators and governors at election time.
Did Japan make any effort to invite GM or Ford on board during the fifties or sixties? Heck no!
The truth is, the nations that play trade with the US and employ protectionism and currency manipulation have screwed the dickens out the middle class of this nation. It's disgusting and insane that nobody will say a thing about what's really happening.
The United States needs to understand that to be a consumption nation alone just doesn't work. It's a fast way to spend yourself into massive debt and have absolutely no way out.
Besides, for all the negative conotations trumped up about the evils of protectionism, look at those that use it. They aren't hurting are they? Instead they are enslaving us to a lower standard of living.
9-01-2007 @ 9:44PM
jpdr1100 said...
Detroit gets as many tax breaks for building/expanding factories as does anyone else. The Kool Aide drinkers just choose to ignore them.
Did Europe, Australia, and China invite GM and Ford to produce there, or did they simply do it?
There is no need for Detroit to try to export to Japan, they already own/control auto makers in that country. Why export to compete with yourself?
9-04-2007 @ 3:06PM
Bill Schwenke said...
They closed the Ford Ranger plant in MN, and I think there is obvious attention to gas prices so regardless of a big truck being the money ticket as it is costly to buy just one, I think people are looking seriously at more value for their money and that GM has abandoned most good design ideas since the 80s and 90s while improving the drivetrains and engines
9-06-2007 @ 5:16PM
A D said...
"Detroit gets as many tax breaks for building/expanding factories as does anyone else. The Kool Aide drinkers just choose to ignore them."
Unlike the Asian corporations, Detroit deserves them.
Are GM, Ford & Chrysler here to cut wages and lower standards of living?
We all know that Toyota & the rest are, they admit it and they lie about their currency.
The real Kool Aid is the truth is coming out about the imports. They don't deserve any tax breaks, they didn't pay any in to begin with. Unless you consider the "breaks" they slip in under the table to gather political power.