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GM cuts production at truck, SUV plants

General Motors Corp has cut production at six plants that make large pickup trucks and sport utility vehicles as a weak housing market, higher gasoline prices and tough competition have hurt sales, a spokesman said on Wednesday.
/ Source: Reuters

General Motors Corp has cut production at six plants that make large pickup trucks and sport utility vehicles as a weak housing market, higher gasoline prices and tough competition have hurt sales, a spokesman said on Wednesday.

The largest U.S. automaker has eliminated previously scheduled overtime through the rest of the year at plants in Arlington, Texas; Janesville, Wisconsin; Silao, Mexico; Fort Wayne, Indiana; Flint, Michigan; and Oshawa, Ontario.

Those plants make pickups such as the GMC Sierra, sales of which fell nearly 28 percent in July, and the GMC Yukon, which slumped 16 percent in July.

"With uncertain fuel prices, and significant competitive pressures in the segment, we face a need to look at current inventory and production levels to make market-appropriate adjustments," spokesman Tom Wickham said.

Wickham declined to say whether GM's production forecast for the third quarter might be revised but said the company might update its plans when it reports monthly sales on September 4.

Lehman Brothers analyst Brian Johnson last week cut his North American vehicle production forecast to 15 million units in 2007, down from an earlier estimate of 15.2 million.

Johnson said he believes GM has kept its third-quarter production forecast unchanged to protect itself from a possible strike as it continues talks with the United Auto Workers union to replace a labor contract that expires September 14.

"As a result, we believe that very large production cuts will be required for GM later this year as well as in 2008 in order to reduce large excess inventories," he said.

The market for pickup trucks, which accounts for nearly 13 percent of overall U.S. auto sales, has become the most fiercely contested segment as automakers sacrifice margins in order to protect market share.

GM executives have said the automaker has stepped up incentives to boost sales in that segment in August, in response to big discounts from competitors.

"Reducing overtime production enables us to reduce pressure for excessive incentive spending," Wickham said.

In July, GM's sales of light trucks — which include SUVs and pickups — fell more than 16 percent.