UAW Strike Threatens GM’s Ever Important Truck Business

The UAW strike against General Motors has forced the automaker to close all three of its North American pickup plants, threatening its truck business at a time when the automaker is relying heavily on GMC Sierra and Chevrolet Silverado sales to drive profits and facing stiff competition from Ram.

Production lines at GM’s Fort Wayne Assembly and Flint Assembly sites have been paused since the UAW walkout began on September 16, while a parts shortage forced the automaker to close its Silao Plant in Mexico on October 1. Flint builds the Chevrolet Silverado HD and GMC Sierra HD, while Fort Wayne and Silao build different versions of the light duty Silverado 1500 and GMC Sierra 1500.

Additionally, GM has been forced to scale back production at its Ramos Arizpe plant in Mexico, which builds V8 engines that are later installed in the trucks. Parts shortages have also stopped the CVT transmission line at the Ramos Arizpe plant, though these transmissions are not used in the automaker’s pickup trucks.

This comes at a time when Chevrolet is facing increasingly stiff competition from Ram in the profit-heavy pickup segment. The Ram 1500 is currently the second-best selling pickup truck in North America, a position that was formerly occupied by the Silverado – though GM still has the strongest overall pickup sales when you combine Silverado and Sierra. US Silverado deliveries totalled 155,482 units in Q3 2019, an increase of about 17 percent year-over-year, while Sierra deliveries increased 29-percent compared to the same period last year, totalling 66,198 units.

Potentially compounding the problem is the fact that October is ‘Truck Month’ at American Chevrolet dealerships. As noted by Automotive News, Chevy is currently offering Truck Month discounts of up to $9,510, or no payments for 90 days, on the Silverado 1500 and up to $11,466 off the heavy-duty Silverado 2500. While GM would certainly be happy to see the incentives drive sales, it could chip away at dealership inventory and result in a shortage if the strike were to go on for a lengthy period of time.

In a statement, GM spokesman Jim Cain told AN that “strikes hurt everyone,” and added that “the sooner (the UAW strike is) resolved, the better.”

If the UAW returns to work within the next few weeks, GM may avoid having to deal with a national shortage of pickup supply. One dealer told AN he keeps about five months of Silverado supply on his lot at a time, though with production lines paused, dealers are not able to sell vehicles that may be on their way to the dealership from the plant. This makes it harder to find customers certain trucks with specific options they may want.

Last weekend, the UAW said that discussions with GM had taken a “turn for the worse.” It is believed the UAW will not accept a contract that doesn’t include the re-opening of Lordstown Assembly in Ohio and keeping the Detroit-Hamtramck plant in Michigan open – sites that GM desperately wants closed in order to cut back on U.S. production costs.

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Source: Automotive News