GM to go slow on SUVs, trucks in cost-cut drive
General Motors is preparing to announce further restructuring to cut costs and conserve cash amid a downturn in US truck sales, the Wall Street Journal reported on Thursday.
By TNN |
NEW YORK: General Motors is preparing to announce further restructuring to cut costs and conserve cash amid a downturn in US truck sales, the Wall Street Journal reported on Thursday, citing people familiar with the matter.
Chief executive Rick Wagoner and top lieutenants are finalising the moves, which have been discussed with the automaker���s board, the Journal reported. Wagoner will announce the new restructuring measures at GM���s annual shareholder meeting on June 3, the report said.
���Obviously these times dictate more actions and Rick and the team are about doing that,��� GM���s lead independent director, George Fisher, told the Journal in an interview. ���Rick and the team are looking at what things can be done and will be done.���
New restructuring actions could include the elimination of some slow-selling models, the Journal reported.
The biggest US automaker, is poised to build fewer pickups and sport-utility vehicles as rising gasoline prices spur demand for passenger cars, the company���s North American sales chief said.
���We probably need to trim back some truck and SUV capacity,��� Mark LaNeve said in an interview in Los Angeles late Wednesday. ���We need to add on the cars and crossovers and we need to continue to fine-tune our overall truck output.��� An announcement may come within a month, he said.
The Detroit-based company has been stung by a drop in demand for full-size vehicles as US retail gasoline prices rose to an average of $3.94 a gallon on Wednesday, according to AAA���s Daily Fuel Gauge Report. US sales of the GMC Sierra and Chevrolet Silverado pickups fell 19% through April, according to Autodata in Woodcliff Lake, New Jersey. ���The biggest issue we���re dealing with now in profitability is how weak the truck market is,��� LaNeve said. ���We have better profits in trucks; everybody has better profits in trucks.���
GM also said May 23 that strikes at two US plants and a 12-week walkout at parts supplier American Axle & Manufacturing Holdings will have a combined pretax earnings impact of $2.8 billion and reduced production by about 363,000 cars and trucks. ���The American Axle strike, for good or bad, took a lot of inventory out,��� LaNeve said.
GM has lost $54 billion since the end of 2004 and was forced to liquidate more than $27.3 billion in assets to generate cash needed to develop new models and run the business.
To reduce costs, the 55-year-old Wagoner has cut more than 34,000 union workers, closed a dozen North American locations and won a new labour agreement that reduces future worker costs by another $5 billion by 2011.
Chief executive Rick Wagoner and top lieutenants are finalising the moves, which have been discussed with the automaker���s board, the Journal reported. Wagoner will announce the new restructuring measures at GM���s annual shareholder meeting on June 3, the report said.
���Obviously these times dictate more actions and Rick and the team are about doing that,��� GM���s lead independent director, George Fisher, told the Journal in an interview. ���Rick and the team are looking at what things can be done and will be done.���
New restructuring actions could include the elimination of some slow-selling models, the Journal reported.
The biggest US automaker, is poised to build fewer pickups and sport-utility vehicles as rising gasoline prices spur demand for passenger cars, the company���s North American sales chief said.
���We probably need to trim back some truck and SUV capacity,��� Mark LaNeve said in an interview in Los Angeles late Wednesday. ���We need to add on the cars and crossovers and we need to continue to fine-tune our overall truck output.��� An announcement may come within a month, he said.
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The carmaker has already lowered its North American production plan this year by 138,000 pickups and SUVs as the US economy slowed and gasoline prices jumped 30%. GM���s US sales dropped 12% through April as demand for light trucks plunged. The Detroit-based company has been stung by a drop in demand for full-size vehicles as US retail gasoline prices rose to an average of $3.94 a gallon on Wednesday, according to AAA���s Daily Fuel Gauge Report. US sales of the GMC Sierra and Chevrolet Silverado pickups fell 19% through April, according to Autodata in Woodcliff Lake, New Jersey. ���The biggest issue we���re dealing with now in profitability is how weak the truck market is,��� LaNeve said. ���We have better profits in trucks; everybody has better profits in trucks.���
GM also said May 23 that strikes at two US plants and a 12-week walkout at parts supplier American Axle & Manufacturing Holdings will have a combined pretax earnings impact of $2.8 billion and reduced production by about 363,000 cars and trucks. ���The American Axle strike, for good or bad, took a lot of inventory out,��� LaNeve said.
GM has lost $54 billion since the end of 2004 and was forced to liquidate more than $27.3 billion in assets to generate cash needed to develop new models and run the business.
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GM said May 13 it may have to borrow and reduce spending if the US economy weakens further, a week after identifying $1.4 billion in obligations that raised concern the world���s largest automaker was pressed for cash. GM chief financial officer Ray Young said March 19 that GM was already planning to cut $500 million in additional spending to increase liquidity. To reduce costs, the 55-year-old Wagoner has cut more than 34,000 union workers, closed a dozen North American locations and won a new labour agreement that reduces future worker costs by another $5 billion by 2011.
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