Styling & Performance - June 2008 - (Page 8)

INDUSTRY NEWS GM SHIFTS ITS STRATEGY…… U.S. DEPARTMENT OF LABOR ANN GM SHIFTS ITS STRATEGY INTO REVERSE Originally published in the Wall Street Journal. fter three years of restructuring and tens of billions of dollars in losses, General Motors Corp. shifted direction once again, unveiling plans to close four truck plants and possibly sell its Hummer brand. The moves were forced on GM by soaring gasoline prices, which are prompting more consumers to opt for more fuel-efﬁcient vehicles. The struggling auto maker must now try to rapidly reduce its dependence on North American truck sales, once seen as the key to its turnaround. Hurt by declining truck sales, GM in May saw its U.S. market share fall to a new low of 19.2 percent—just a nose ahead of Toyota’s. GM’s decision to scale back truck production means that losses are likely to continue for at least another two years, and possibly longer—prolonging one of the worst stretches of corporate losses in history. Between 2004 and 2007, GM lost more than $55 billion, and in this year’s ﬁrst quarter, it reported a loss of $3.25 billion. As far back as 2005, when gas prices were rising past $2 a gallon, SUV sales were falling, and many in the industry were saying the SUV era was coming to an end. GM’s Chairman and Chief Executive Rick Wagoner disagreed. That year, he accelerated the launch of the company’s new trucks and SUVs by six months. The market for large SUVs is “stable, not shrinking,” he said at one press conference. Other auto makers, including Toyota, also thought demand for A trucks would remain healthy. But GM’s crosstown rival, Ford Motor Co., had a dimmer view of truck sales, and began downsizing its truck capacity. In 2007, GM’s turnaround effort was lifted by booming sales in China, Latin America and other emerging markets. The company began positioning itself as more than just a seller of gas-guzzling trucks. It unveiled a concept for a battery-powered car called the Chevrolet Volt that drew praise from environmentalists. It added a sprinkling of hybrids to its lineup, including hybrid versions of its big SUVs. But gas prices started creeping up. Sales of big SUVs, which are made from the same components as those used in full-sized pickup trucks, began falling sharply. In this year’s ﬁrst quarter, the entire industry was on pace to sell only about 500,000 full-sized SUVs for the full year — half as many as were sold in 2003. Last month, GM announced it would slash production at four truck plants in the second half of the year. Wagoner gave up dayto-day oversight of GM’s global auto operations, turning it over to Frederick “Fritz” Henderson, who was promoted from chief ﬁnancial ofﬁcer to chief operating ofﬁcer and president. By last month, gas prices had climbed to $4 a gallon in many parts of the country, and even some hard-core pickup buyers began defecting to smaller vehicles. As the month wore on, GM ofﬁcials concluded the truck market was in a “structural” or long-term decline. GM decided it couldn’t continue making trucks in six plants. 8 Styling & Performance I Uniting The Specialty Parts Industry

Table of Contents Feed for the Digital Edition of Styling & Performance - June 2008

Styling & Performance - June 2008 Contents Soapbox Buzz Making Money with 1967-72 Chevrolet/GMC Trucks, Part II Red, White, Blue... & Green Limiting Installation Liability The House That Jack Built MAP vs. MVP Pricing Supply Line Distributor Directory

Styling & Performance - June 2008

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