The president of the United Auto Workers union said on Thursday the union is talking with General Motors about the potential threat to plants and jobs from slumping U.S. car sales. GM's response will be more trucks and SUVs, and sources say at least six slow-selling car models may be killed off.
"We are talking to (GM) right now about the products that they currently have" at underused car plants such as Hamtramck in Michigan and Lordstown in Ohio, and whether they might be replaced with newer, more popular vehicles such as crossovers, Dennis Williams told reporters.
"We are tracking it (and) we are addressing it," Williams added.
GM has cut shifts at several U.S. plants this year as inventories of unsold cars have ballooned. Industry analysts said more jobs could be at risk as the automaker wrestles with permanently shrinking production of small and midsized sedans.
GM is reviewing whether to cancel at least six passenger cars in the U.S. market after 2020, including the Chevrolet Volt hybrid, which could be replaced in 2022 with a new gasoline-electric crossover model, Reuters has learned from people familiar with the plans.
Some analysts have singled out GM's Hamtramck plant in Detroit as one of the most vulnerable because of plummeting car sales.
The plant, which opened in 1985, builds four slow-selling models: Buick LaCrosse, Chevrolet Impala, Cadillac CT6 and Chevrolet Volt.
In the first half, it built fewer than 35,000 cars, down 32 percent from the same period in 2016, according to suppliers familiar with GM's U.S. production schedule. The typical GM assembly plant builds 200,000-300,000 vehicles a year.
COMING ATTRACTIONS: TRUCKS AND SUVS
GM must "create some innovative new products" to replace slow-selling sedans "or start closing plants," said Sam Fiorani, vice president of AutoForecast Solutions.
The auto maker already has begun to shift future production plans from cars to trucks, according to Morgan Stanley auto analyst John Murphy. He estimates that fewer than 10 percent of the new vehicle models that GM will introduce over the next four years will be passenger cars, with the rest divided among trucks, SUVs and crossovers.
The company is cutting production in the short term rather than dumping cars into rental car fleets at little or no profit, company executives have said.
However, the long-term shift in demand toward SUVs calls into question the future of factories GM currently has dedicated to building sedans, analysts said.
GM said it does not comment on future products.
Alan Batey, president of GM's North American operations, told Reuters in an interview: "I don't think we have too many" sedans.
GM SAYS IT'S 'IN A GOOD PLACE'
Batey said GM intends to reduce overall inventories to around 75 days by year-end from 105 currently. "We're in a good place to have a good 2017," he said.
The shift toward SUVs, fueled by cheap gasoline, is putting pressure on nearly all major automakers in the United States to simultaneously shift short-term production plans and rework long-term product programs that drive capital spending over several years.
Sales of GM passenger cars plunged 17 percent in the first half and 36 percent in June, exceeding the industry-wide declines of 12 percent in the first half and 14 percent in June, according to Automotive News.
GM dealers ended June with as much as six months supply of certain models. Two months is considered normal.
"There could be some consolidation" of passenger car production in fewer U.S. plants, said Jeff Schuster, senior vice president of LMC Automotive. "GM doesn't need all the sedans it has today."
Reporting by Paul Lienert and Nick Carey in Detroit