General Motors, facing its worst sales performance in over 30 years and escalating financial woes, has announced today that it will cut 190,000 vehicles from its production schedule in the second and third quarters of this year.
To achieve this, GM plans to idle 13 plants for up to nine weeks each in an effort GM hopes will trim high dealership inventories and put production in line with slowing sales.
GM also said the cuts could help prevent a GM shutdown in case Delphi, GM’s troubled former parts unit, could not deliver parts because of its own financial problems.
“We’re taking aggressive steps to accelerate our inventory initiatives that have worked well since the first of the year,” said GM’s North American President, Troy Clarke. “While sales have been performing at or close to our plan estimates, and dealer inventories have been reduced accordingly, we want to more closely align our inventories with even more conservative market assumptions.”
Mr Clarke also said GM had planned to gradually reduce vehicle inventories at the start of 2009, but that GM CEO Fritz Henderson decided to accelerate the inventory reduction with the plant closings to help GM meet the goals in its viability plan.
GM consulted with President Obama’s Automotive Task Force, but was not given orders to shut the plants.
“It was an internal decision, part of reinventing GM, part of the viability plan,” said Mr Clarke. “We certainly advised the task force of our actions so that they are familiar with what we are trying to get done.”
Plants that assemble new or redesigned vehicles, including the Chevrolet Camaro, Buick LaCrosse, Chevrolet Equinox and Cadillac SRX will not be affected by the shutdown.
GM said it had 767,000 vehicles in inventory at the end of March and that sales are not likely to improve any time soon. The company hopes to cut its inventory to 525,000 units by July.