GM to cut 15% of salaried workforce, close 5 North American plants

[iluvatar5150]

I have a hard time figuring out why American auto makers can't sell sedans. Here in the BOS-WASH corridor, that and small-medium SUV's are all anybody drives.

 

[wing2000]

I have a hard time figuring out why American auto makers can't sell sedans. Here in the BOS-WASH corridor, that and small-medium SUV's are all anybody drives.

...I think you answered your own question. For some reason, American consumers think driving small-medium SUV's is a better experience than driving a sedan. Personally, I don't get it...an SUV will never drive as well as well...

 

[iluvatar5150]

...I think you answered your own question. For some reason, American consumers think driving small-medium SUV's is a better experience than driving a sedan. Personally, I don't get it...an SUV will never drive as well as well...

Yeah, but it's not like sedans are under-represented here at all. I was thinking about this and looking around as I was driving home last night and probably a majority of the cars I see every day are sedans. Even the luxury brands have taken to putting 4 doors on many of their "coupes".

I wonder how much of this has to do with the fact that the overwhelming majority of vehicles (of all types) are imports. About the only domestic vehicles I see are pickups and government/police vehicles, along with the occasional Corvette and Cadillac.

 

[essentialsaltes]

I have a hard time figuring out why American auto makers can't sell sedans.
...
Yeah, but it's not like sedans are under-represented here at all..

Right, it's a particular problem for US carmakers. Best selling sedans in the first 6 months of 2018.

1. Toyota Camry: 178,795. +1.1% (i.e. they managed to increase their sedan sales (albeit not by much)
2. Honda Civic: 176,242. +0.3%
...
8. Ford Fusion: 86,978. -18.9% (top US brand)
9. Chevrolet Cruze: 77,691. -26.1% (one of the one's on GM's chopping block)

Toyota sold more Camrys than the top 2 US sedans combined. And those big negative growth numbers on the US models is pretty ugly.

"Among the top-20 passenger cars sold in 2018 only three models— the Toyota Camry, Honda Civic, and Nissan Sentra — saw positive year-over-year sales growth, with the Sentra leading the way at a minute 2.8%. The market may be coming off a 7-year upswing in sales, but consumers are clearly making a move away from sedans. Shrinking as it may be, the market for sedans is still massive — commanding roughly 25% of a market that is expected to once again sell 17 million cars this year."

 

[comana]

Yeah, but it's not like sedans are under-represented here at all. I was thinking about this and looking around as I was driving home last night and probably a majority of the cars I see every day are sedans. Even the luxury brands have taken to putting 4 doors on many of their "coupes".

I wonder how much of this has to do with the fact that the overwhelming majority of vehicles (of all types) are imports. About the only domestic vehicles I see are pickups and government/police vehicles, along with the occasional Corvette and Cadillac.

Import auto makers continue to thrive and I also see a good mix of sedans amongst SUVs and Trucks. Imports Always seem to provide what the American consumer is looking for years before the Domestics catch up.

Another issue is quality of cars produced by American manufacturers. I purchased a Chevy some 20 years ago and it was a horrible disappointment. Two years in with normal wear and tear the interior looked like it was a ten year old or older car. I have never considered an American car since. I know many other people who buy only imports for similar reasons.

 

[RestoreTheJoy]

People just don't want sedans today at today's prices, and sale prices are a function, at least in part, of input costs. Input costs have been affected, at least to some degree, by tariffs. Maybe GM would lower prices on Sedans if they could, but they're unable because they would be selling at a loss due to increased costs?

I'll buy a thousand new sedans if they cost $1. I won't buy one if it costs $60K.

I seriously doubt GM is selling anywhere close to a loss, ever. Profit might be reduced. There are over a billion people in China. Selling their cars even at lower profits to so many people (especially if they want sedans) still seems doable. I suspect this is more about making a statement than about impossibility.

 

[Yekcidmij]

I seriously doubt GM is selling anywhere close to a loss, ever.

GM isn't really all that profitable. I'm not sure about their sedan lines specifically, but I bet their margins aren't really that good on it - especially if they're scaling back on production.

Profit might be reduced. There are over a billion people in China. Selling their cars even at lower profits to so many people (especially if they want sedans) still seems doable.

If it were profitable, they'd be doing it, or at least trying to. Instead, they're cutting back, so it's probably just not profitable.

I suspect this is more about making a statement than about impossibility.

I doubt it. I think it's just the numbers and just business. The lines aren't profitable at prevailing prices, so they're being cut. These guys earn their money producing and selling cars, not making statements with their paychecks.

 

[iluvatar5150]

GM isn't really all that profitable. I'm not sure about their sedan lines specifically, but I bet their margins aren't really that good on it - especially if they're scaling back on production.

On Marketplace the other day, they said that of the ~3M-3.5M units of production overcapacity (i.e. the number of cars we could build per year but aren't), something like 1M of it belongs to GM.

 

[USincognito]

They're not alone though. I remember when the Nissan Pulsar was one of the biggest selling small cars here. Had been for decades. Then head office in Japan decreed that it should be renamed the Tiida to match the brand in other countries - sales plummeted. Eventually, logic prevailed and it was changed back to the Pulsar, but the damage was done and they eventually stopped selling it here.

Meanwhile Toyota, whose head office had been pushing the local branch to rebadge the Corolla as the Auris (for the same reason) pointed at Nissan and said "see - that's what happens when you mess with a proven brand". Management saw sense and relented, and the Corolla is still sold here to this day.

You make a great point about branding which I'll put in a U.S. context with essentialsaltes post, but just wanted to point out that the Pulsar NX was the only Pulsar badged model in the U.S. and Canada and I haven't seen one in nearly 30 years. They were only sold here from 82-90.

"Among the top-20 passenger cars sold in 2018 only three models— the Toyota Camry, Honda Civic, and Nissan Sentra — saw positive year-over-year sales growth, with the Sentra leading the way at a minute 2.8%.

Just want to point out that these are tremendously popular sedans that have been sold under the same badge for 46 years (Civic) and 36 years (Camry and Sentra) respectively.

For domestic sedans, you Buick's Regal that has been around since 1973, Chevy's Malibu and Impala since the 60s, but neither of them resembled their namesakes in any way other than the Regal and Impala being large sedans. For Ford, you have the Focus (1999), Fusion (2009) and the 500/Taurus (2005). Fiat Chrysler has the 200 (2011) and 300 (2005).

 

[essentialsaltes]

What looked earlier this week like a resolution to the costly automotive tariff war with China has proven to be little more than a presidential boast.

The impact [of tariffs] is actually less than that being felt in some other sectors of the U.S. economy, such as agriculture, but it is still a hit to the auto industry, which shipped about 250,000 vehicles to China last year. Vehicle sales were expected to grow because demand for SUVs had risen there.

"We … thought Charleston could build cars for China," Volvo's global CEO Hakan Samuelsson told USA Today during an interview at the Los Angeles Auto Show last week. "That will not work," Samuelsson added, noting that Volvo would consider shifting some production from Charleston to China, impacting production levels and hiring at the plant.

Other automakers could follow.

 

[Trogdor the Burninator]

"We … thought Charleston could build cars for China," Volvo's global CEO Hakan Samuelsson told USA Today during an interview at the Los Angeles Auto Show last week. "That will not work," Samuelsson added, noting that Volvo would consider shifting some production from Charleston to China, impacting production levels and hiring at the plant.

Other automakers could follow.

That's another interesting effect from Trump's tariff wars - car makers who might have previously thought about exporting certain models from the Us to China will be reluctant to do so given that Trump might again ramp up tariffs. Instead, they'll either just shift capacity to China itself or export from a third country (especially given the value of the Chinese market versus the relatively static US market)

 

[essentialsaltes]

Instead, they'll either just shift capacity to China itself or export from a third country

Exactly, Trump's focus on individual US-China trade tariffs seems to forget that there's a whole rest of the world out there to do business with. This is very relevant to the issue of soybeans. If China starts buying from Brazil, there is little incentive for them to ever switch back to US suppliers, even if the tariffs are eventually removed.

 

[Yekcidmij]

The trade "deficit" with China also continues to increase:

Foreign Trade - U.S. Trade with China

Seems that the tariffs aren't working.