While General Motors would like to be seen as more tech company than traditional automaker, having aspirations of leading with regard to autonomous vehicles and EVs, the company faces some challenges to profitability that could make heavy investments in those areas untenable in the long term. Sales are cooling off in the United States and China, its two biggest markets, while many of the automaker’s U.S. production facilities go underutilized.
In fact, General Motors has the highest factory underutilization rate of any carmaker in the U.S., Automotive News reports, with four facilities operating on just a single shift. Four of GM’s car plants – Bowling Green Assembly (Kentucky), Lordstown Assembly (Ohio), Detroit-Hamtramck Assembly (Michigan), and Orion Assembly (Michigan) – are among the most underutilized, and while GM still maintains that its U.S. car business is viable, it’s no secret that crossovers have taken a huge bite out of car sales.
Keeping those facilities humming while they fail to contribute much to GM’s U.S. sales numbers is costly.
Meanwhile, the economy is cooling in China, which is General Motors’ largest market by sales volume, and weakening demand and pressures on automotive financing are conspiring to slow down sales. In the U.S., GM enjoyed a smashing third quarter, yet is offering voluntary buyouts to some 18k seasoned salaried employees in North America as a “proactive” cost-cutting measure.
This could be because GM has found consensus with many industry experts, and anticipates a downturn brought on partly by higher interest rates and higher tariffs, after years of record high sales in the U.S.
There’s no reason to suspect that General Motors might be in trouble with these market headwinds, however; the GM of today is a much stronger, more capable, more financially fit company than the one that declared bankruptcy late in the last decade. But given the expense of its large autonomy and EV pet projects, there may be more work to be done.
Stay tuned for more great GM business news.