GM plans to pause production of the Chevy Silverado and GMC Sierra pickup trucks for two weeks at one of its truck plants, starting in late March. The pause will take place at GM’s Fort Wayne Assembly plant located in Indiana, and will begin on the week of March 27th, 2023.
The production pause is intended to “help maintain optimal inventory levels” according to Cherry Weiland, the Fort Wayne facility’s Assistant Plant Director. GM wants to “proactively” keep inventory within certain limits, The Detroit News reports, targeting a 50 to 60 days supply that roughly matches the 60 days supply preferred by the auto industry before the COVID-19 pandemic.
Chevrolet slightly exceeded this inventory optimum in December 2022. Production and shipment continued improving during that month, while sales remained basically flat. As a result, inventory at dealerships climbed to just above 60 days.
During December, it was noted new vehicle supply rose 66 percent year-over-year, but sales increased just 2 percent. Analysts noted this would lead to growth in incentives and discounts to move new vehicles off lots faster. New vehicle prices and interest rates are high while used car prices are dropping, causing an exodus of customers from new vehicle sales as they look for a thriftier used option.
GM CFO Paul Jacobson stated in the January 31st earnings report that The General is actively managing production to match up supply with demand. A backlog of unsold Chevy Silverado truck inventory is currently adding up with 100 days supply reported at the end of January 2023.
The two-week pause will give demand to catch up with supply and clear out some of the accumulated Chevy Silverado and GMC Sierra trucks. GM’s three other full-size truck facilities in Flint, Michigan, Canada, and Mexico will continue operating and producing vehicles while Fort Wayne Assembly is shut down. The Chevy Silverado is the top seller among the Bow Tie’s nameplates.
GM anticipates $10.5 billion to $12.5 billion in adjusted earnings for 2023 despite slackening demand, with inventory management such as the two-week idling of Fort Wayne Assembly already accounted for in its financial forecasts. February sales volume should be sustained by fleet sales according to some analysts.