A General Motors Co Cobalt vehicle moves along the assembly line at the company's Sao Caetano do Sul manufacturing facility in Sao Caetano, Brazil, in this October 24 2012 file photo. Picture: BLOOMBERG/DADO GALDIERI
A General Motors Co Cobalt vehicle moves along the assembly line at the company's Sao Caetano do Sul manufacturing facility in Sao Caetano, Brazil, in this October 24 2012 file photo. Picture: BLOOMBERG/DADO GALDIERI

 

General Motors  (GM) plans to announce as early as Monday significant cuts in car production in North America and that it will stop building some low-selling car models, says a source briefed on the matter.

GM planned to announce a broader restructuring of its efforts as it shifted its focus more towards electrified and autonomous vehicles, the source said.

GM declined to comment ahead of an expected announcement at mid-morning.

Cost pressures on GM and other carakers and suppliers have risen with  demand for traditional sedans waning . The group has said tariffs on imported steel, imposed earlier this year by the Trump administration,  cost it $1bn.

The decision comes as the largest US carmaker is poised to idle an assembly plant in Canada. A Canadian union, Unifor, representing most unionised carworkers in Canada, said on Sunday it had been informed by GM that there would be no product allocated to the plant in Oshawa after December 2019.

GM employs about 2,500 union staff in Oshawa, which produces the Chevrolet Impala and Cadillac XTS sedans. It also completes final assembly of the stronger-selling Silverado and Sierra pick-up trucks, shipped from Indiana.

GM debated internally for months how to address shrinking car demand, said a person briefed on the matter. The issue was certain to re-emerge in GM's contract talks next year with the United Auto Workers (UAW) union.

GM has begun what is expected to be a long and expensive transition to a new transportation model that embraces electrified and automated vehicles, many of which will be shared rather than owned.

The No 1 US carmaker signalled the latest belt-tightening in late October when it offered buyouts to 50,000 salaried employees in North America.

With US car sales lagging, several car plants have single shifts, including Ford's Detroit Hamtramck and Lordstown, Ohio, assembly plants.

Rivals Ford Motor  and Fiat Chrysler Automobiles have curtailed US car production. Ford said in April it planned to stop building nearly all cars in North America.

Slumping US sedan sales

An industry-wide slowdown in passenger car sales started to pick up steam in 2017.

The shift in US consumer preference away from passenger cars in favour of larger, more comfortable SUVs and pick-up trucks has been swift and severe, leaving carmakers scrambling to readjust.

As recently as 2012, passenger cars made up more than 50% of all US new vehicle sales. Through the first nine months of 2018, that had fallen to a little over 31%.

More than 16 months ago, the UAW said it was discussing with GM  potential threat to plants and jobs from slumping US sedan sales.

“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, said then-UAW president Dennis Williams.

At the time, GM was considering whether to cancel at least six passenger cars in the US market after 2020, including the Chevrolet Volt hybrid, Buick LaCrosse, Cadillac CT6, Cadillac XTS, Chevrolet Impala and Chevrolet Sonic, according to informed sources.

Sales of Cruze, which is built at Lordstown, fell 27% through September 2018. Impala, which is built at Oshawa and Hamtramck, was down 13%.Buick LaCrosse and Cadillac CT6, which are built at Hamtramck, were down 14% and 11%, respectively.

Reuters