GM job cuts the latest ramification of sluggish car sales – CNBC

Posted: Wednesday, November 09, 2016

America’s love affair with pickup trucks and SUVs is coming at the expense of sedans — and automakers are trimming their operations in response.

General Motors on Wednesday became the latest firm to cut jobs and production amid a slowdown in car sales. The automaker is permanently laying off 2,000 workers and cutting third-shift production at assembly plants in Lordstown, Ohio, and Lansing, Michigan.

The Lordstown plant, outside of Youngstown, Ohio, builds the Chevrolet Cruze sedan. The Lansing plant assembles the Cadillac CTS and ATS, as well as the Chevrolet Camaro. Sales of those models are down between 8.3 percent and 19.3 percent this year.

Those declines are indicative of a broader industry trend. Overall, car sales have fallen more than 8 percent this year, while sales of pickups, SUVs and crossovers are up 7.7 percent, according to the research firm Autodata.

GM’s move comes just two months after Ford announced it’s moving its small car production to Mexico, while re-tooling some U.S. assembly lines to build the bigger, more profitable, SUVs and crossovers.

Those vehicles are in greater demand thanks to lower gas prices, and the fact that they get far better mileage than they did in the past. This change in buyer preference is one reason Fiat-Chrysler is in the process of eliminating almost all of its car production in the U.S., while focusing on building more SUVs and crossovers.

But as automakers build fewer cars in the U.S., while still producing sedans in Mexico, their moves are being coming under greater scrutiny.

Donald Trump repeatedly hammered Ford for expanding in Mexico as he ran successfully for president of the United States. At a September campaign stop in Michigan, Trump blasted Ford for moving production of cars to Mexico.

“We shouldn’t allow it to happen. They’ll make their cars, they’ll employ thousands of people, not from this country, and they’ll sell their cars across the border,” Trump said.

As a candidate, Trump promised he would get Ford to bring production back to the U.S. — though he has not commented on the topic since being elected Tuesday night.

Following Trump’s election, Ford issued a statement saying, “We congratulate the President-elect and new governors, members of Congress and elected officials across all levels of the U.S. government. We agree with Mr. Trump that it is really important to unite the country — and we look forward to working together to support economic growth and jobs.”

The broader auto industry is experiencing a pullback in demand, following years of a sales run-up after the recession.

Questions? Comments? BehindTheWheel@cnbc.com.

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