Weak Sales Of Chevrolet Cruze Lead To More GM Cuts

DETROIT -- General Motors plans to cut Chevrolet Sonic and Buick Verano production by more than 20 percent and lay off about 100 workers -- the latest result of slowing U.S. demand for small cars.

GM confirmed today that it will "adjust plant production to better align with market demand" at its Orion Assembly plant in suburban Detroit. It plans to lay off about 100 people in phases between July and year end.

Company officials told factory workers at a meeting this morning that production will be reduced to about 26 cars per hour, from 33 per hour today, a 21 percent decrease, according to a plant employee and another person with knowledge of the plan.

GM has cut production at the factory several times over the past year amid lower gasoline prices and a market shift from cars to crossovers and trucks.

The company took single weeks of downtime at Orion in January, March and April. GM said in November that it would lay off 160 workers from the plant, also to slow the line rate. It also plans an additional week of downtime around the July 4th holiday, resulting in a total of three off weeks, instead of the traditional two.

Sales down

Sonic sales fell 29 percent through the first five months of the year to 29,082 cars, amid a 7.2 percent drop in industrywide subcompact sales, according to the Automotive News Data Center.

Verano sales fell 16 percent to 15,279, while industrywide sales of compact cars rose 3.8 percent.

GM's car sales sank 15 percent through May. While hurt by consumers' migration to crossovers in particular, Chevy and Buick car lineups have gotten long in the tooth, making it tougher to compete against fresher models.

The current-generation Sonic has been on sale in the U.S. for nearly four years. The current Cruze compact, Chevy's top-selling car globally, was launched nearly five years ago.

Chevy is set to launch redesigns of several key nameplates in coming months, including the Malibu midsize sedan and the Camaro -- both slated to go on sale in the fourth quarter -- and the Cruze, which will hit showrooms early next year.

Reduced inventories

The previous production cuts at Orion helped to sharply reduce dealer inventories of the two cars, which had ballooned early this year. As of June 1, there were 23,300 Sonics on dealer lots or en route to stores, a 67-day supply -- down from a 216-day supply on Feb. 1. Verano stocks were 6,400, a 51-day supply.

“Both Chevy and Buick continue to use the right balance of sales incentives and production volumes to keep a healthy level of product in the market in an increasingly truck and crossover-focused sales environment," GM said in the statement.

Orion has 1,580 hourly employees and 180 salaried workers. GM is in the process of investing $160 million into the 4.3-million-square-foot factory to prepare for production of the Chevy Bolt starting in 2017, a new electric vehicle that GM says will travel about 200 miles on a single charge.

Source : http://www.autonews.com/article/20150612/OEM01/150619945/gm-to-cut-chevy-sonic-buick-verano-production-amid-weak-sales

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