This morning, General Motors announced that they are shutting down five vehicle assembly plants across the United States. The shut-downs will take place throughout the month of January in order to cut the supply of their current overflowing inventory.
Back in October, when GM released their third-quarter earnings, they announced that they had increased their U.S. dealer inventory by a whopping 111,000 vehicles and had over 874,000 cars and trucks available all over the nation– which is the most stock GM has had in the past eight years. This course of action is taking place in hopes to cut back this inventory build-up immediately following the end of 2016.
In addition to the general excess inventory, this will also cut the oversupply of unspecified unpopular sedans, as buyers are continuing to choose larger SUVs and trucks over smaller cars. In November, General Motors had an 87 day supply of all vehicles, but experts say 60-70 days is ideal. While these numbers are sure to worry some, GM says its build-up will soon be extremely beneficial when they change tooling mid-2017 for the introduction of their new SUV. “We’re going to be responsible in managing our inventory levels,” said Jim Cain, Chevrolet spokesman. Jim explained that Chevy is aiming for a 70-day supply by the end of 2016, and is not at all worried about their supply rates.
When looking at competitors, its not difficult to see they also have taken similar courses of action. Over the past year and a half, Ford has given a decent cut to shifts and production. Fiat/Chrysler has also opted to cut production and, much like GM, has stopped building smaller cars such as the Chrysler 200 and Dodge Dart.