GM Plant Shutdown

[JustN89]

GM Shut Down of plant in Fort Wayne, IN

GM shutting down their plant in Fort Wayne for two weeks in order to "maintain optimal inventory levels". In other words, dealers and OEMs learned that folks are willing to pay way more for cars than they were pre-virus. Lower inventory levels and higher prices are potentially here to stay, unless the consumer can show restraint and refuse to pay higher prices.

 

[2010Civic]

Or they wise up and not buy a GM.

 

[JeffKeryk]

2022 sales have slowed from 2021 levels. Inventory is evil, ya know. Kinda funny; GM is close to even, but overall trend is lower.
I'm sure they watch "days to sell" pretty closely. And higher interest rates cannot help.

 

[KGMtech]

From a business case, the tradition of overbuilding inventory and then having to discount prices was stupid, and the consumer became used to this pattern. The supply chain is not yet fixed, so the OEMs will go back to the 1950's practice of taking orders and then building to order, with far less speculation of what should sell quickly.

 

[Hall]

Anyone know if the UAW contracts have changed much over the years in regards to shutdowns ? Growing up, there was a Ford engine plant (still operating) and during their big shutdown where they had to re-tool for a new engine, which took months, the workers rec'd 80% of their regular pay. Basically a 3-4 month paid vacation....

 

[dishdude]

Or they wise up and not buy a GM.

Thank you for such a thoughtful and insightful contribution.

 

[haggler]

GM Shut Down of plant in Fort Wayne, IN

GM shutting down their plant in Fort Wayne for two weeks in order to "maintain optimal inventory levels". In other words, dealers and OEMs learned that folks are willing to pay way more for cars than they were pre-virus. Lower inventory levels and higher prices are potentially here to stay, unless the consumer can show restraint and refuse to pay higher prices.

This will only last so long, basic econ 101. The current prices cannot be sustained in this environment, especially when the price of new cars is tied directly to interest rates and rising. So it seems they want to maintain their fat margin while producing less? Seems like a losing strategy in a market with a lot of competition. Just look at the housing market, and there is far less inventory of homes (especially around here).

 

[DemoFly]

It does not take a genius to wonder why GM is shutting down the Fort Wayne plant. A plant which builds its highest margin and highest demand product.

After reading the article they were pretty transparent. They want to maintain the margin that is currently on their pickup trucks and keep dealers leaner than 2019.

 

[Rmay635703]

It does not take a genius to wonder why GM is shutting down the Fort Wayne plant. A plant which builds its highest margin and highest demand product.

After reading the article they were pretty transparent. They want to maintain the margin that is currently on their pickup trucks and keep dealers leaner than 2019.

What they want and what they will get are two different things.

demand is falling and the reason they “overproduce “ is to minimize production costs.

If any manufacturer decides to fill the unmet demand the strategy will fail, as has happened in the past when businesses try to manipulate supply to rig the market.

 

[2010Civic]

Thank you for such a thoughtful and insightful contribution.

Anytime

 

[JeffKeryk]

It does not take a genius to wonder why GM is shutting down the Fort Wayne plant. A plant which builds its highest margin and highest demand product.

After reading the article they were pretty transparent. They want to maintain the margin that is currently on their pickup trucks and keep dealers leaner than 2019.

You may be right, but there are other scenarios. The best manufacturing schedule is linear; a known, smooth delivery schedule. This helps with supply chain management (to and from factory), minimizes overtime and allows for factory maintenance. End-of-qtr push is expensive.

Maybe some of both? Who knows? But smoothing production schedule, lowering prices, etc are not necessarily signs of slowing demand.

 

[ford250]

Covid was the perfect storm for the car business
No longer a need for lots and lots of inventory on the yard.

 

[Cujet]

Covid was the perfect storm for the car business
No longer a need for lots and lots of inventory on the yard.

I think you are correct.

Maybe,,, all it will take is one dealership able to be "the sales leader" by having a better selection of vehicles for competition to revive.

 

[Vern_in_IL]

Great GM! I'll go ahead and preorder that Hummer!

NOT.

 

[Mainia]

I have a question, is there any data on the emotional buy, IE the bored buy, the depressed buy, the I am newly divorced buy and
, the deal is so low I had to buy it it buy. With high prices and lack of excess inventory and more push to build to order, isn’t this a multi digit % of sales that will be reduced highly because of high pricing and build to order? I know the rich and less smart will still just buy, but the lower and middle class may reduce emotional buying in the mid to high single digits wouldn’t you think?

 

[ford250]

I think you are correct.

Maybe,,, all it will take is one dealership able to be "the sales leader" by having a better selection of vehicles for competition to revive.

Look at what it saved from a cost stand point

 

[Exhaustgases]

The good thing is some of us will never buy a new vehicle again. Why? Not all of us are millionaires. Nor do all of us wish to deplete any savings for a bunch of cobbled together junk that will either end up a lemon after warranty, or a known problem child down the road like many high priced crap cars now. I don't see how anyone can afford a car payment on top of taxes on a home they own, or some crazy high rent for the abode. It makes no sense.

 

[demarpaint]

Interest rates are headed up. There will come a point when the greed stops due to higher rates hurting the mfgs. and the dealers. Cash will become king and the now hungry, greedy dealers will be chasing customers into the parking lot to cut a deal. History has a way of repeating itself.

 

[dlundblad]

I wonder if it’s still the chip shortage that finally caught up to them. They have way too many trucks sitting around that are 99.9% done.

 

[dlundblad]

Thank you for such a thoughtful and insightful contribution.

You make thoughtful and insightful posts like this all the time so what’s the big deal?