DETROIT -- General Motors' monumental announcement on Monday that it plans to close up to five assembly plants in North America and slash its workforce will only partially close the gap between capacity and demand for the automaker's sedans, according to a Reuters analysis of industry production and capacity data.
Sales of traditional cars in North America have been declining for the past six years and are still withering. After GM ends production next year at factories in Michigan, Ohio and Ontario, it will still have four U.S. car plants, all operating at less than half of rated capacity, according to figures supplied by LMC Automotive.
In comparison, Detroit-based rivals Ford Motor Co. and Fiat Chrysler Automobiles will have one car plant each in North America after 2019.
The Detroit Three are facing rapidly dwindling demand for traditional passenger cars from U.S. consumers, many of whom have shifted to crossovers, pickups and SUVs. Cars accounted for 48 percent of retail light-vehicle sales in the United States in 2014, according to market researchers at J.D. Power and Associates. This year, sedans will account for less than a third of light-vehicle sales.
That shift in turn has left most North American car plants operating far below their rated capacities, while many light-truck plants are running on overtime.
The collapse in car demand is a challenge for nearly all automakers in the United States, including Japan's Toyota Motor Corp. and Honda Motor Co., which have the top-selling models in the compact and midsize car segments. Toyota executives said last month they are evaluating the company's U.S. model lineup. But Toyota also plans to build compact Corolla sedans at a new $1.6 billion factory it is building in Alabama with partner Mazda Motor Corp.
The obstacles facing GM in its plans to close more factories became apparent on Tuesday as President Donald Trump threatened to block payment of government electric vehicle subsidies to GM. While it is not certain that Trump unilaterally has the power to do that, he made it clear he intends to use his office to pressure the company to keep open a small car plant in Ohio that GM says will stop building vehicles in March.
Asked whether GM's plans to close factories and cut jobs might not solve the demand problem for its sedans, GM spokeswoman Kimberly Carpenter said on Tuesday: "We continuously look at our operations for opportunities to improve our efficiency and capacity utilization. We believe the actions announced yesterday move us in the right direction and we will continue to monitor the market and consumer trends and adjust accordingly."
Shares of the No. 1 U.S. automaker closed 2.5 percent lower at $36.69 on Tuesday, after rising nearly 5 percent the previous day.