GM General Motors Company

By Mike Colias 

U.S. auto makers, responding to further decline in demand for sedans and other passenger cars because of low gasoline prices, are rebalancing production at U.S. factories in favor of more sport utilities and pickup trucks.

General Motors Co. on Tuesday said it plans to add 650 hourly workers in Tennessee at a plant making the GMC Acadia and the Cadillac XT5, two midsize crossover sport-utility versions. Idled for three years after the auto maker's bankruptcy, the Spring Hill, Tenn., factory is playing an increasingly important role in GM's U.S. operations.

GM's job additions come one day after Ford Motor Co. idled a Mustang factory in suburban Detroit for a week to prevent unsold versions of the sports car from stacking up on dealer lots. Mustang sales fell 32% in September, helping drag Ford's overall volume down for the month.

The moves come as sales of light trucks, including SUVs and pickups, represent about 60% of total vehicle sales in the U.S. market. Motivated by continuing low gas prices, buyers are opting for heavier vehicles that give them more functionality and typically deliver richer margins for auto makers.

Overall U.S. auto sales increased 0.5% during the first three quarters, and analysts are questioning whether 2016's total will surpass last year's record of 17.5 million light vehicles sold. Passenger cars are taking the hit, with deliveries of sedans, coupes and compact cars off 8.2% compared with the first nine months of 2015, according to Autodata Corp. SUVs, meanwhile, rose 7.1%, pickups were up 5.8% and vans increased 17%.

Bloated car inventories can be addressed by production cuts, but may require heftier incentives. J.D., Power estimates spending on discounts and rebates hit a record in September as auto makers worked to grease demand and clear dealer lots to make room for new production.

The slowdown in passenger car sales is forcing some parts suppliers to retrench.

French interior-parts supplier Faurecia SA said Tuesday that it will permanently close two suburban Detroit plants that make seats and other components exclusively for the Chrysler 200 sedan, which Fiat-Chrysler Automobile NV recently decided to phase out because of poor sales.

"When they end production, we end production," a Faurecia spokesman said.

Faurecia will lay off a total of 348 people at those factories and two others that make car parts, he said.

--Christina Rogers contributed to this article.

Write to Mike Colias at Mike.Colias@wsj.com

(END) Dow Jones Newswires

October 11, 2016 17:20 ET (21:20 GMT)

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