General Motors (GM) on Tuesday predicted the end of the era of gasoline guzzlers as it announced plans to close four North American truck and sport utility vehicle (SUV) plants and ramp up production of new fuel-efficient vehicles.
The automaker said it was also considering revamping or even selling its hulking Hummer brand as high fuel prices have dramatically shifted consumer demand.
“These moves are all in response to the rapid rise in oil prices and the resulting changes in the US, changes that we believe are more structural than cyclical,” said Rick Wagoner, GM chairman and chief executive.
PHOTO: AP
“We at GM don’t think this is a spike or temporary shift; we believe that it is, by and large, permanent,” Wagoner said at a news conference at GM’s annual shareholder meeting in Wilmington, Delaware.
The Big Three US automakers — GM, Ford and Chrysler — managed to sustain their profitability in the 1980s and 1990s in the face of a steady loss of market share to Asian competitors because of their dominance in the truck and sport utility vehicle market.
But they were slow to match the more fuel-efficient car-based SUVs of their competitors and have been forced to implement massive restructuring plans in recent years in the face of multibillion dollar losses.
GM alone has eliminated 71,000 jobs in the US since 2000 and lost more than US$54 billion since 2005.
“While some of the actions, especially the capacity reductions, are very difficult, they are necessary to adjust to changing market and economic conditions and to keep GM’s US turnaround on track and moving forward,” Wagoner said.
Wagoner declined to say when GM expects to return to profitability but said the automaker remained committed to restructuring itself “for sustained profitability and growth.”
“While we remain reasonably constructive on the long-term prospects for the auto industry in the United States, we view the near-term US economic and auto market environment with considerable caution,” Wagoner told reporters.
The White House called the announcement a sign that the auto giant was “adapting well” to market shifts.
“It’s a sign that Detroit continues to adapt and evolve and address the change in consumer tastes and attitudes. And I think that they’re adapting well,” spokeswoman Dana Perino said.
The announcement came hours before GM reported an annual 28 percent drop in US sales last month to 272,363 vehicles as car sales fell 14 percent to 130,115 and light truck sales fell 37 percent to 138,777 vehicles.
GM plans to shutter production at its Toluca, Mexico, pickup truck plant at the end of the year and its Oshawa, Canada, plant will be closed next year.
Plants in Moraine, Ohio, and Janesville, Wisconsin, are slated for closure in 2010 “or sooner if market demand dictates,” GM said.
Chrysler on Tuesday reported a 25 percent drop in US sales for last month as high fuel prices slashed demand for gasoline guzzling trucks and sport utility vehicles.
Chrysler said record sales among its newest highly fuel-efficient vehicles helped boost the month’s total to 148,747 vehicles but its results were further undermined by a 40 percent cut in sales to lower-margin fleet customers.
“There is an unprecedented shift in the industry that is challenging, but we are determined to provide consumers what they need and want,” vice chairman and president Jim Press said in a press release.
Separately, Ford Motor Company’s US sales fell 16 percent last month to 217,998 vehicles amid a sharp drop in demand for gasoline-guzzling truck and sport utility vehicles, the automaker said on Tuesday.
Car sales, however, rose 3.8 percent from May last year to 85,542 amid strong demand for more fuel-efficient models but were still 5 percent lower in the year to date amid a general economic slowdown.
WAITING GAME: The US has so far only offered a ‘best rate tariff,’ which officials assume is about 15 percent, the same as Japan, a person familiar with the matter said Taiwan and the US have completed “technical consultations” regarding tariffs and a finalized rate is expected to be released soon, Executive Yuan spokeswoman Michelle Lee (李慧芝) told a news conference yesterday, as a 90-day pause on US President Donald Trump’s “reciprocal” tariffs is set to expire today. The two countries have reached a “certain degree of consensus” on issues such as tariffs, nontariff trade barriers, trade facilitation, supply chain resilience and economic security, Lee said. They also discussed opportunities for cooperation, investment and procurement, she said. A joint statement is still being negotiated and would be released once the US government has made
NEW GEAR: On top of the new Tien Kung IV air defense missiles, the military is expected to place orders for a new combat vehicle next year for delivery in 2028 Mass production of Tien Kung IV (Sky Bow IV) missiles is expected to start next year, with plans to order 122 pods, the Ministry of National Defense’s (MND) latest list of regulated military material showed. The document said that the armed forces would obtain 46 pods of the air defense missiles next year and 76 pods the year after that. The Tien Kung IV is designed to intercept cruise missiles and ballistic missiles to an altitude of 70km, compared with the 60km maximum altitude achieved by the Missile Segment Enhancement variant of PAC-3 systems. A defense source said yesterday that the number of
Authorities have detained three former Taiwan Semiconductor Manufacturing Co (TMSC, 台積電) employees on suspicion of compromising classified technology used in making 2-nanometer chips, the Taiwan High Prosecutors’ Office said yesterday. Prosecutors are holding a former TSMC engineer surnamed Chen (陳) and two recently sacked TSMC engineers, including one person surnamed Wu (吳) in detention with restricted communication, following an investigation launched on July 25, a statement said. The announcement came a day after Nikkei Asia reported on the technology theft in an exclusive story, saying TSMC had fired two workers for contravening data rules on advanced chipmaking technology. Two-nanometer wafers are the most
Taiwanese exports to the US are to be subject to a 20 percent tariff starting on Thursday next week, according to an executive order signed by US President Donald Trump yesterday. The 20 percent levy was the same as the tariffs imposed on Vietnam, Sri Lanka and Bangladesh by Trump. It was higher than the tariffs imposed on Japan, South Korea and the EU (15 percent), as well as those on the Philippines (19 percent). A Taiwan official with knowledge of the matter said it is a "phased" tariff rate, and negotiations would continue. "Once negotiations conclude, Taiwan will obtain a better
RSS