GM Cuts More Car Output After U.S. Drivers Flock to SUVs

Updated on
  • Automaker will idle Detroit-Hamtramck plant for six weeks
  • Slower output should pare supply of Buick LaCrosse, Chevy Volt

General Motors Co. will idle a Detroit car factory for six weeks later this year to pare inventory before making permanent production cuts because of slowing sales, according to a person familiar with the plan.

Following the temporary shutdown at its Detroit-Hamtramck plant, GM will slow the assembly line by 20 percent and dismiss 200 workers, said the person, who asked not to be named because employees hadn’t yet been informed of the decision.

Buick LaCrosse

Photographer: Patrick T. Fallon/Bloomberg

The factory, which operates only one shift, builds Buick LaCrosse, Cadillac CT6 and Chevrolet Impala sedans, plus the Chevy Volt plug-in hybrid car -- all of which have been slow sellers. Buick dealers had 284 days worth of LaCrosse sedans in inventory and GM had more than 100 days of Volt and CT6 cars on U.S. lots as of Oct. 1, according to trade publication Automotive News. Carmakers typically like to carry about 60 days worth of each model.

GM and its peers have been cutting production at car plants as consumers have rapidly shifted to buying sport utility vehicles. Through September, passenger-car sales have fallen 10 percent while SUV and light truck deliveries have risen 4.4 percent, according to researcher Autodata Corp.

The carmaker’s stock fell as much as 2.9 percent Thursday in New York, the biggest intraday drop since Aug. 1. Shares were down 1.6 percent to $44.74 at 10:41 a.m.

“While the initial headline interpretation may be negative, we actually view it positively,” Citi analyst Itay Michaeli wrote in a note Thursday. “This action continues to show that GM remains price disciplined” by cutting production instead of increasing incentives.

The Wall Street Journal reported on GM’s production cuts earlier Thursday.

— With assistance by Joshua Fineman

    Before it's here, it's on the Bloomberg Terminal.