Car-tastrophe - GM, Fiat Chrysler Idle 7 Plants; Over 10,000 Workers Affected

Tyler Durden's picture

Just weeks after Ford idled four plants "due to slowing sales", GM and Fiat Chrysler announced today that they will idle seven plants across Canada and US as they work to reduce near-record high inventories amid weakening sales.

With an inventories-to-sales ratio above historical peaks (only beaten by huge spike in 2008 when sales stopped), the pain for automakers has only just begun...

For example, GM's inventory of vehicles on dealer lots at the end of November stood at 874,162, up 26.5% from the same time a year ago. And so, as AP reports,

General Motors will temporarily close five factories next month as it tries to reduce a growing inventory of cars on dealer lots.

 

The factories will close anywhere from one to three weeks due to the ongoing U.S. market shift toward trucks and SUVs, spokeswoman Dayna Hart said Monday. Just over 10,000 workers will be idled.

 

The company's Detroit-Hamtramck factory and Fairfax Assembly plant in Kansas City, Kansas, each will be shut down for three weeks, while a plant in Lansing, Michigan, will be down for two weeks. Factories in Lordstown, Ohio, and Bowling Green, Kentucky, each will be idled for one week.

 

The factories make most cars in the General Motors lineup including the Chevrolet Cruze, Camaro, Corvette, Malibu, Volt and Impala; the Cadillac CT6, CTS and ATS; and the Buick Lacrosse.

 

At the current sales pace, GM dealers have enough Malibus to last for 84 days and enough Camaros to last for 177 days, according to Ward's Automotive.

 

Normally automakers like to have a 60-day supply on lots.

If that were not bad enough, Fiat Chrysler said it is adding four off days to the Jan. 2 observation of New Year’s at its minivan assembly plant in Windsor, Ontario, and its large-car facility in Brampton, Ontario.

The moves are to align production with demand, spokeswoman Jodi Tinson said in an e-mail.

 

The automaker has already stopped making the Dodge Dart and Chrysler 200 sedans.

 

A factory in Belvidere, Illinois, will make its last Jeep Compass and Patriot models this week, allowing retooling for Cherokee production, she said.

And these shutdowns follow Ford Motor Co., which said in October that it was cutting production at plants that make the Escape small SUV and F-150 pickup in the face of slowing sales.

Worst of all, while the rest of the US manufacturing sector has been in secular decline, the auto industry was perhaps the last shining light for battered US manufacturing during the past several years. However, if demand for cars continues to collapse, forcing supply to follow suit, it is only a matter of time before the US manufacturing recession returns with a vengeance, and at the worst possible time: when not even the US service sector can hinder the realization that the US economy is on the verge of contracting.

Finally, here are some auto-related charts courtesy of Goldman Sachs.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
SERReal1's picture

But, Obama fixed the economy I thought? /sarc.

gregga777's picture

US population: ~320 million
Working age Americans NOT in the workforce: ~96 million
Official unemployment rate: 5%

Nothing but lies all the time from the Goldman Sachs Feral Reserve System, the United States of America's Feral Gangster Government and the Feral gangster government's organs of state propaganda (mainstream media & entertainment oligopoly).

True unemployment rate: >23%

knukles's picture

Great for increasing after tax disposable incomes.
Merry Christmas.

Paul Kersey's picture

But if they're not building Fiats, what will Americans find to buy with their fiat money?

Dickweed Wang's picture

But if they're not building Fiats, what will Americans find to buy with their fiat money?

 

Yugos

CrabbyR's picture

I guess it`s a matter of perspective, if you are an employer ther market is the best in ten years...cheap labour, debt slaves with university education that can`t say no...perfect for exploitation

jewish_master's picture

working for some one else is always a bad idea...

Consuelo's picture

 

 

"Thank you, President Schmoke, for this award"

 

You're welcome, Madame Schmeckel.

 


Deplorable's picture

Starbucks will be adding a ton of new Baristas (Soda Jerks) when they open all those new stores next year.

Just in time for the graduation class of 2017.

Hal n back's picture

Well, he did say anybody saying the economy is in decline is peddling fiction.

The auto manufacturatures must have it all wrong along with retailers and restaurants.

People do not like trump because he is blunk ans scares people with what he says.

I guess he would be more likeable if he told people what they wanted to hear.

LawsofPhysics's picture

This time around, no bailouts motherfuckers!!!!

trying to stay optimistic...

Jethro's picture

From your keyboard to god's screen...

youarelost's picture

Trump will bail them out. Just like Bush and Obama did.

Oliver Klozoff's picture

Although I agree they will be bailed out, it won't be anything like those two did.

moorewasthebestbond's picture

Look!

 

Dead green shoots!

gregga777's picture

I've noticed that recent models of the Jeep Cherokee look like wool sweaters run through a hot dryer: severely shrunken; mere shadows of their former selves. They look like toys next to my Ford F-250 diesel truck. I wonder if that has anything to do with their slow sales.

Caledonian's picture

In line with the emasculated snowflake generation.
all new models will come with your choice of pansies or daffodils instead of pinstripes.

GeezerGeek's picture

A '76 Eldorado would look like a toy next to an F-250. Most modern cars look small next to my '74 Dodge Charger, and that was considered an intermediate when I got it. Cars today utilize space better, so we get more space in a smaller package. For instance, the Charger had about a foot of empty space between the front bumper and the radiator, and another foot between the radiator and the engine. My '98 Intrepid, designed on a computer, had do little free space in the engine compartment that it was impossible to look down around the engine and see the ground, but it still was bigger than the Charger when it came to interior seating space.

And by the way, your F-250 looks like a toy next to certain Cats, like these: https://www.youtube.com/watch?v=3KQibfmLf0A

It's all relative. Way back when imports were just starting to penetrate the American market, a Cadillac dealer in the Northeast made a big deal by filming a Sedan DeVille hitting a Renault Dauphine head on, ostensibly proving that small cars were unsafe in an accident. The Renault dealer responded by having a semi tractor-trailer plow through a similar Caddy. Too bad we didn't have youtube back then, it would have been funny to watch. 

 

Pumpkin's picture

Lower the prices by 20-30k, that might help a bit.

1980XLS's picture

Sorry to bust your bubble.

It's only about preferences for SUVs & crossovers vs sedans.

At least for now.

Safelyundergroundlul's picture

Implosion in 3..2..; seriously though. I wonder when the real shit will start. Surely before the end of '17? 

buzzsaw99's picture

lower lending standards can fix this. /s

Seasmoke's picture

There is no way they can go any lower. I know a guy with a BK and a repo just got a loan for a NEW car !!!!

Caledonian's picture

A buddy of mine is a finance manager. He can put you in a new car with no job.

Oliver Klozoff's picture

Yeah! How's a guy supposed to build credit?

Seasmoke's picture

Digital Cash Only for Clunkers.

jomama's picture

Quick get Trump out there to save all those jobs!

Vardaman's picture

Great Christmas present for bath house barry.  The bailout sop to the UAW has gone tits up.  Outstanding...

Proofreder's picture

Merry Christmas !

NOT !!!

Lex_Luthor's picture

Isn't it strange that BMW, Mercedes and Audi are beating record sales month after month... Maybe it's not the economy after all. Maybe American cars simply suck and nobody wants them...

OCnStiggs's picture

I agree. But... BMW USA sales are down around 9% while parent BMW is up like 15%. The SUV's coming out of S.C. are like the Fords of old. Any interior color you want as long as its black. I guess the USA group didn't get the memos from Germany. When will they learn???

Big Brother's picture

I think they do a better job at sales forcasting, and they send their employees home for the month of August, every year, year after year.  I think they also make a conscience effort to avoid channed stuffing.

Shpedly's picture

Actually American cars are pretty damn good these days. I wouldn't buy or own any over engineered German piece of shit out of warranty, even if they were half price. I've been making a living fixing the bastards for 30 years, so I speak from experience. Today's example: 2005 Audi A8, right side low beam xenon out. Diagnosed bad ballast. Customer needed today so I had to source the part directly from Audi. I explained that I could do it for half that if they could wait a couple days. Nope gotta have it today, can't wait. MSRP on the ballast $460, 2 hours total time with diagnose $178. $27.60 tax. Grand total $665.60 to get a headlight going. Jesus!

sinbad2's picture

Yeah this modern technology, what's wrong with oil lamps, and starter motors, what a wank, hand crank starters never break, just your arm.

Lots of this modern stuff, disc brakes, overhead cams, pump up tyres etc is just for posers.

GeezerGeek's picture

You clearly hate females and old people. Hand cranks? 95% of women would be unable to drive, and probably 90% of those over 70. I wonder if Medicare would even pay for arms broken cranking a car. (BTW, where do you put the crank on a Tesla?)

 

Oliver Klozoff's picture

Super expensive but today's light technology is light years (nyuk) ahead of yesterdays lamp tech.

http://gmauthority.com/blog/wp-content/uploads/2013/04/2014-Cadillac-CTS...

 

Today, light projectors, led park + turns and their parabolas are some of the most intensely styled and engineered areas of any vehicle.

Shpedly's picture

Oliver, the technology far exceedes the improved benefit. The turning lamp motors for example, fail with great regularity. Most of those motors can not be replaced. It requires an entire new headlight assembly. So what, most people would say. Who cares if my cornering lamp doesn't work. Well, people do care when the dash is giving a constant message of headlight failure and a warning sound every 2 minutes. Average cost to replace a high end headlight is 2 grand or better. People wonder why car insurance is so expensive or why they total a car for a bumper skin, fender and a headlight. It's because the engineers have run totally amok. Its insane. LED's won't be any better from the get go. While the LED bulb has a long life, it will take cooling fans and heat sinks to keep it going in a closed water tight enviroment like a headlight. God knows what they will cost to replace.

StagStopa's picture

True that. Build and material quality continues to decline. Nothing but "composite " (plastic ) everything including critical engine components.

The worst: Chrysler fiat.  Stay away.

Roxi

Cole The Bar's picture

I drive a 2010 Dodge (FiatChrysler) product and I have yet to have any issues. It's one of the nicest vehicles I've ever driven.

blueskyranch's picture

Changing the outside tin every year ain't cutting it any more. You got to put some real change into the new model or buyers will shun it. The technology changes have run the course. Cut the f@cking price and maybe the owners of 5 + year old cars/trucks/SUVs will consider a new ride. Else, layoff and STFU.

wisehiney's picture

There is no mention of the poor robots that will be idled.

AI matters. 

GeezerGeek's picture

Speaking of AI (in a manner of speaking), try doing a search (I refuse to mention that evil entity whose name must not be mentioned) on "GateBox hologram'. It's neat technologically, but the video I saw promoting it featured one massively pathetic Oriental guy.

Hohum's picture

The future isn't building cars, it's buying stocks.  Everyone knows that.

Atomizer's picture

Fiat = Fix it again Tony. Government Motors is the issue, they're the parisite's creating joint ventures. Steal intellectual property rights. Ask Toyota if regrouping with a new GEO v2 branding. 

StagStopa's picture

@atomizer that's "parasite", not "parisite". Jesus christ.  Fify.

Roxi