GM sees opportunity in surrendered territory

DETROIT — General Motors' car sales are falling faster than those of its domestic rivals, but the company insists it won't join Ford Motor Co. and FCA US in abandoning most sedans.

"We have to continue to listen to our customers and react to their needs," Alan Batey, GM's North America president, said in an interview.

"And right now, there's a lot of customers that want to buy cars, and they're big segments. That some of our competitors have decided to exit them, that just creates a bigger opportunity for us."

GM, at this point, has not announced any drastic cuts to its car lineup. In fact, it has refreshed the Chevrolet Camaro, Cruze, Malibu and Spark for the 2019 model year and last month announced a $175 million investment in a Lansing, Mich., plant to build two of Cadillac's next-generation sedans.

Batey, who also is global head of Chevrolet, declined to comment on reports that GM plans to discontinue the subcompact Chevy Sonic as early as this year and eventually discontinue the Impala large sedan and Volt plug-in hybrid sedan. The third-generation Volt is expected to have a crossover profile similar to Chevy's approach with the fully electric Bolt.

For now, GM has been cutting back car production to keep inventories from getting out of hand. It eliminated one of two daily shifts building the Chevy Cruze compact in Lordstown, Ohio, last month and has suspended production at Lordstown and other plants at various points to slow output.

Batey said GM does not expect to need any more downtime this year at its plants. The automaker is “in a good position” to maintain current car production while capitalizing on popular crossover models, he said.

“Based on what I know today, I think we’re in a good position and I don’t see any further downtime against our car plants,” he told Automotive News. “But, again, if something happens and we see a shift, then we’ll react to it.”

GM is in a different position than Ford, which helps explain why it’s not as pessimistic about cars. GM’s high-volume cars are newer, and it has more underutilized production capacity in the U.S. than Ford, so it doesn’t need to discontinue car nameplates to make room for more profitable crossovers and SUVs.

In fact, GM’s discipline to avoid overproducing has resulted in the highest underutilization rate in the U.S., according to the Center for Automotive Research.

GM’s car sales last year declined 18 percent to 732,647 units, according to the Automotive News Data Center. Meanwhile, sales of its crossovers increased 14 percent to 936,077 units — a company record.

In the first quarter, GM’s car sales were down 17 percent. Crossovers rose 23 percent.

Including estimated results for April and May, after GM stopped reporting monthly U.S. sales, GM’s car sales are down 23 percent this year through May, compared with 14 percent for Ford and 20 percent for FCA.

Four of GM’s six U.S. plants that build cars are operating on just one shift. The other two are running on two shifts with no overtime — a juxtaposition with its light-truck plants, which are running nearly around the clock. Since January 2016, GM has cut at least five shifts of car production at its U.S. plants.

“We were very proactive on right-sizing what we felt the opportunity was and not getting into the price wars that you see going on with certain competitors,” Batey said. “So actually, our car business has been very good for us.”