Peak Auto Claims Another Victim
Americans are buying fewer motor vehicles and driving them less, which is another reason GM had to retrench.
Idle.
Photographer: Daniel Acker/Bloomberg
Lots of explanations have been trotted out for the job cuts and plant shutdowns announced by General Motors Co. on Monday. Some (including me) cited the shift in consumer demand from sedans to sport utility vehicles. Others pointed to the cost of President Donald Trump’s trade wars. Yet others saw it as a sign that the economy is slowing. And let’s not forget GM Chairman and Chief Executive Officer Mary Barra, who said, “The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future.”
Here’s another explanation that really hasn’t gotten enough attention: GM is cutting back in part because Americans don’t need as many new motor vehicles as they used to. I owe this idea to veteran Washington economist Hal Singer, who wondered on Twitter why vehicle sales were down from a year ago even as economic growth had accelerated. But I actually wrote a whole column about the phenomenon last year that just needed a little updating to be applied this week’s news.