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Following Ford’s lead, GM has again come back to the table with additional and much-needed production cuts for its mid- and full-size trucks. GM’s outlook had been based on a second-half recovery and this latest admission indicates it no longer (and rightfully so) expects such a turnaround. As part of its plans, GM plans to reduce pickup and SUV production by 170,000 units in the second half of 2008 compared to a year ago while also adding 47,000 units of car, crossover and van output.
The June 2008 North American production forecast already incorporates an over 180,000-unit reduction of GM’s mid- and full-size trucks. Plant actions do vary versus this latest forecast, with marginal variances at the program level expected. The table below highlights the variances between the June CSM forecast and GM’s actions. Although GM production is higher by 13,000 units, CSM does not plan to increase the forecast based on GM’s actions and will remain at 1.2 million units in the second half of 2008.
Amid soaring fuel prices, demand for GM’s large trucks plummeted with inventory levels ballooning and in need of corrective action. According to Autodata, GM ended the month of May with an inventory of over 430,000 units or a 133-day supply of GMT900-based trucks. While GM has already identified several truck plants for closure, such as Janesville, Moraine and Oshawa Truck, all three are in danger of being targeted for earlier-than-stated closure dates. CSM’s current forecast advanced the closure of Janesville and Moraine by one year to mid-2009 with Oshawa Truck following by the end of 3Q 2009.
GM plans to increase production of cars such as the Chevrolet Cobalt and Malibu along with crossovers, namely the Lambda-based Buick Enclave, GMC Acadia and Saturn Outlook. These increases are not enough to offset the massive losses in truck output and highlight the disparity between car and truck capacity and product portfolio footprints at GM. The June 2008 CSM North American production forecast currently reflects line rate and shift increases at Lordstown along with substantial daily and weekend overtime at plants like Fairfax, Lansing Delta Township, Orion and Wentzville. Upside potential remains for these products but remains minimal versus the latest forecast volumes.
While GM is addressing product and capacity issues, they continue to be a day late and a dollar short, a perennial issue with the company. An array of new cars and crossovers is in the pipeline, but these are desperately needed now. In the meantime, competitors, chiefly Japanese and Korean manufacturers, are well-positioned to take advantage of today’s opportunities with their diverse product portfolios.
For questions, please contact Joe Langley,
Senior Analyst, North American Vehicle Forecasts,
at joelangley@csmauto.com or +1 248 465 2832
CSM Worldwide provides trusted automotive market forecasting services and strategic advisory solutions to the world’s top automotive manufacturers, suppliers and financial organizations. CSM Worldwide covers the global automotive environment from Detroit, Grand Rapids, Frankfurt, London, Paris, Shanghai, Tokyo, São Paulo, Budapest, Delhi, Bangkok and Seoul.