GM Schedules Additional Plant Downtime Amid Soft Sales, Inventory Glut, Union Officials Say

By Mike Colias 

General Motors Co. will extend the typical summer shutdown at certain U.S. factories to deal with slumping sales and bloated inventory, a sign the industry's hot streak is grinding to a halt.

The No. 1 U.S. auto maker in terms of sales will idle its Chevrolet Malibu factory near Kansas City for five weeks starting in late June, Vicky Hale, president of the United Auto Workers Local 31, said. Job cuts will be needed if GM is forced to slow assembly-line speeds when those workers return.

Additional downtime is also slated in Lordstown, Ohio, a small-car factory already stung by deep layoffs related to a pullback in demand for passenger cars. A GM spokesman declined to comment on specific plans.

Auto makers traditionally schedule two-week factory breaks in mid summer, often to prepare for model changeovers. The pace of car sales, however, is slipping after seven years of record sales and most major car companies have responded by curtailing output ahead of summer months that usually are the busiest for the industry.

Ford Motor Co. has also announced production slowdowns at certain plants. While Ford's trucks are selling at a brisk pace, its sedans are growing increasingly unpopular as gasoline prices remain low.

GM enters the summer with a glut of unsold inventory after running production lines at relatively high rates to prepare for factory downtime related to plant upgrades. WardsAuto.com estimates GM's production increased 2.9% over the first four months of 2017, even as the broader industry pulled back.

As a result, GM's inventory spiked 43.5% at end of May compared with the prior year. It has nearly 1 million vehicles sitting on dealer lots, WardsAuto.com estimates, representing 101 days' worth of supply, or 23.4% of total industry stock.

GM's holds about 17% market share. It is emerging from a tough May when Ford -- traditionally the No. 2 seller -- took a rare lead in the overall market due to its strong truck sales.

Write to Mike Colias at [e-mail]

(END) Dow Jones Newswires

June 14, 2017 09:48 ET (13:48 GMT)

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