General Motors shutting 5 US plants in January 2017 to cut the oversupply of sedans in the US market due to poor sales
General Motors is shutting 5 of its plants in US for varying durations in January 2017. The company cites cutting the oversupply of sedans to US market as the reason behind the decision of shutting these factories. The sedan sales in the country have fallen significantly while inventory has been increased rapidly.
In an attempt to reduce the pressure from the dealer inventory, General Motors has decided to cut down the manufacturing of sedans for certain period of time. The Detroit-Hamtramck plant in Michigan and the Fairfax plant in Kansas will close for three weeks. The Lansing Grand River plant in Michigan will be down for two weeks while the Lordstown plant in Ohio and Bowling Green factory in Kentucky won’t see the doors open for a week.
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Apart from reducing production of sedans, the company is also seeking ways to cost control. On November this year, General Motors announced the layoff of around 2,000 workers, to be implemented in January, and suspending the third shift at Lordstown and Lansing Grand Rover plants.
At the Lordstown plant, the company manufactures Chevrolet Cruze sedan while the Lansing factory produces the Cadillac ATS and CTS. Both these cars have seen sales dropping around one fifth from a year ago. In fact, the sedan sales have dropped significantly around the world while the SUV and crossover sales have seen rapid rise forcing the automakers to shift strategy.
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In India too, General Motors announced it will shut the Halol plant in Gujarat and will increase the production capability of its Talegaon factory in Maharashtra. The company also announced it will invest $1 billion (Rs. 6,400 crore) in Indian market by 2020.