GM Cuts Production – Plant Closings, No More Hummer, No more SUV’s?
Today GM released the announcement to its employees and to the public that they have plans to majorly cut production including 4 truck plants. The slow in the economy and high gas prices is obviously a major factor in the decision that GM is making in the upcoming months. Surprisingly Rick Wagoner, GM’s CEO, announced possible closing of plants that make many GM SUV’s and trucks with a mention of a possible removal or sale of Hummer which may remove this brand from the market all-together.
This may come as a surprise when you listen to Rick Wagoner mention the closing of plants that produce the Chevy Tahoe/GMC Yukon. We all know that is a big monster in the SUV market but we also know the SUV market is diminishing very fast mainly due to the fact that SUV’s consume A LOT of gas and the economy just cannot support the high price of such vehicles.
CNN.com posted the news this morning and reads:
GM: Trucks out, cars in
Automaker plans to shut 4 pickup and SUV plants, build more fuel-efficient vehicles, and may dump the Hummer brand.
NEW YORK (CNNMoney.com) — General Motors announced plans Tuesday to shut four truck and SUV plants that employ thousands of workers. It also said high gas prices are here to stay – and, with them, consumers’ growing preference for more fuel-efficient vehicles.
At a news conference in Wilmington, Del., GM Chairman and CEO Rick Wagoner announced plans to roll out more fuel-efficient vehicles, including approval to start the production process on a vehicle that can run gas-free for trips up to 40 miles.
But the plant-closing plans are a stunning admission from the nation’s largest automaker that its long dependence on large SUVs and pickups is no longer a viable strategy for a company struggling to end losses from its North American operations.
The plants to be closed include two U.S. facilities: The Moraine, Ohio plant that builds midsize SUVs, such as the Chevrolet Trailblazer and GMC Envoy; and the Janesville, Wisc., assembly line that builds large SUVs such as the Chevy Tahoe and Suburban and GMC Yukon.
In addition, it plans to close a pickup plant in Oshawa, Canada, and a truck plant in Toluca, Mexico.
The Mexican plant that builds medium-duty trucks sold to businesses rather than consumers will close later this year. The other plants will close in 2009 and 2010, with sooner closings possible if sales do not improve. Each U.S. plant has about 2,500 employees.
iReport.com: Still driving a gas guzzler?
The company said it believes that high oil and gasoline prices will be the norm, and that prices are likely to go higher due to strong global demand for oil.
“These higher gasoline prices are changing consumer behavior and rapidly,” said Wagoner. “We don’t think this is a temporary spike or shift. We think it is permanent.”
Goodbye Hummer Wagoner also said GM is looking at possibly selling its Hummer unit as part of a strategic review of the SUV brand based on military vehicles. The Hummer H3 mid-size SUV gets about 13 to 14 miles per gallon in city driving in the most recent EPA ratings. The H1 and H2 are larger vehicles on which EPA does not give mileage estimates.
The brand has become the symbol to many members of the public of a gas-guzzling large U.S. vehicle.
Hello Volt He also announced that GM has approved production of the Chevrolet Volt, a so-called plug-in hybrid vehicle that can run about 40 miles without any use of gasoline. The Volt will be built in GM’s Hamtramck, Mich., plant and is due in showrooms by the end of 2010.