Corp. confirms plans to eliminate a production shift at its Delta Township, MI, assembly plant due to moderating sales of its ’08 Buick Enclave, GMC Acadia and Saturn Outlook cross/utility vehicles.
However, the cutbacks do not necessarily portend a decline in demand for the CUVs, some industry analysts say.
Elimination of the plant’s third shift, which amounts to 1,000 workers, will occur near the end of November, a spokesman for the auto maker says. Layoffs are effective Dec. 21.
The news comes about two months after GM added the shift to meet overwhelming demand for the all-new CUVs.
Sales of the CUVs reached 14,534 units in June, shortly after the launch of the Enclave, which met with favorable reviews and has boosted Buick’s conquest rate.
However, sales through September have moderated slightly, averaging about 12,500 units over the 3-momth period, according to Ward’s data. Those sales have come with few incentives, although GM does have up to $1,000 in conquest cash or consumer cash on various models.
U.S. Light Vehicle Sales - September 2007
“I don’t think the bloom is off the rose,” says Jim Hossack, a consultant with AutoPacific in Tustin, CA. “The products have been very well received and should have a long life. What we are seeing is some uncertainty on behalf of the whole industry in regard to interest rates and the housing market.”
The production cuts also come 11 days after the UAW ratifies a new collective bargaining agreement with GM.
However, the auto maker told Wall Street analysts and media shortly after ratification of the 4-year deal that it expects to be able to move employees around to more effectively manage inventories. GM last week eliminated a shift from a plant in Detroit that builds the Cadillac DTS and Buick Lucerne fullsize sedans.
Erich Merkle, vice president of forecasting at IRN Inc. in Grand Rapids, MI, says GM has begun exercising that freedom.
“GM is prepared to let the sales fall a bit,” he tells Ward’s. “In the past, they would make the product and push it into the market, and now they’re letting the sales decide. It’s gone from push to pull.”
Merkle does not see CUV demand weakening, although he says GM might be experiencing some difficulty moving Saturn up-market with the Outlook.
“Saturn buyers are used to the $15,000 Ion, the $15,000-$18,000 Vue. When they see a $36,000 Outlook, they tend to run for cover,” he says. “That’s not to say GM can’t move Saturn up-market, it’s just difficult and it takes time.”
GM, which reports its October sales Nov. 1, says it informed Michigan Gov. Jennifer Granholm of the latest cuts Monday. The state has lost a slew of manufacturing jobs since GM,Motor Co. and LLC began restructuring.
“The state keeps losing auto jobs, and they’re difficult to replace,” Merkle says.