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.
Comments
I don’t get what these “huge” EV and autonomy costs come from. A small startup company has done this better than GM could ever aspire to, Tesla. Just reverse engineer their products, or BMW, or Mercedes, or Audi and don’t try to reinvent the wheel. Even if GM has to pay a Royalty, just get on with it and quit making excuses!
A small start up company. 15 years it’s not a start up anymore. But it is still a small company.
The other day where I live someone in town owns a Tesla model 3. Kinda of plain and no bling at all. The number one problem is you cannot get 42” tv in it, so what good is it, let alone a BBQ grill. You can in a SUV at almost any size.
I don’t understand after more than five years that GM has not been able to reduce cost based on the Chevy VOLT technology and put it in the Equinox. I rather have the hybrid and be able to drive from FL to NY than any self driving vehicle or fully electric. Maybe they’ve looked at all of the Fords hybrids and none are selling all that well compared to all gas?
You’re dead *** lying. You can get a 42” TV in just about any car. And who puts a grill in their car?!? Once you buy it from the store, it pretty much stays stationary in the same place. The Tesla Model 3, and Model S/X all have rear seats that fold completely flat, and the hatchbacks allow ultimate versatility. What a lame excuse to hate on a Tesla.