Truck sales are plummeting thanks to rising gas costs. What are the major automakers doing about it? First, let's recall our post last month on Nissan and Chrysler.
The column goes on to discuss how Chrysler will build large vehicles for Nissan and Nissan will supply or co-manufacture small vehicles for Chrysler. This will help reduce the multiple architecture or platform problem that Mr. Phelan believes is critical to Chrysler's long term viability.
So if sales of large vehicles are decreasing, who got the better end of that deal? If fuel costs continue to rise, will Chrysler be manufacturing... anything?
Now let's move on to Ford.
Ford Motor Co. will halt more pickup-truck and sport-utility vehicle production over the next two months, a sign that falling U.S. consumer demand for the vehicles still hasn't bottomed out. The auto maker's Wayne, Mich., truck-assembly plant, home to the Expedition and Navigator SUVs, will be shut from June ...
Sounds prudent. Painful, but prudent. Better to reduce the top line than to keep on manufacturing products that aren't going to be purchased any time soon.
And then there's GM. I guess you could say they're lucky... they have idle truck plants thanks to a strike, so they aren't incurring major shutdown costs like Ford while still drying up excess supply. Or so you would think.
In a regulatory filing, GM said the 11-week strike at American Axle & Manufacturing Holdings Inc. cut GM's truck production by 230,000 vehicles in the second quarter. GM estimated that drop would lower its pretax earnings by $1.8 billion, and warned it won't be able to make up that lost production later in the year because of slack truck demand.
Uhh... wait a minute. If demand is slack, why would you want to make up production? So the trucks can sit and tie up cash while depreciating and waiting for a fire sale? Yep, that's a good strategy.
GM has more than a simple production demand problem. They just don't realize what it is.