Auto Makers Shift Output to SUVs -- WSJ
October 12 2016 - 03:08AM
Dow Jones News
By Mike Colias
U.S. auto makers, responding to weaker demand for sedans and
other passenger cars amid low gasoline prices, are rebalancing
production at U.S. factories in favor of building more
sport-utility vehicles and 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 SUVs. Idled for three years after the
auto maker's 2009 bankruptcy, the Spring Hill, Tenn., factory is
playing an increasingly important role in GM's U.S. operations. The
job additions come a day after Ford Motor Co. idled a Mustang
factory outside Detroit for a week to prevent inventories stacking
up on dealer lots. Mustang sales fell 32% in September, helping
drag Ford's overall U.S. volumes down for the month.
Auto-parts supplier Faurecia SA also said on Tuesday that it
will permanently close two suburban Detroit plants that make seats
and other components for the Chrysler 200 sedan, which Fiat
Chrysler Automobiles NV recently decided to phase out because of
poor sales.
"When they end production, we end production," a Faurecia
spokesman said. The French company will dismiss 348 people at those
factories and two others that make car parts.
The moves come as sales of light trucks, including SUVs and
pickups, now represent about 60% of total vehicle sales in the U.S.
market. Motivated by continuing low gasoline prices, buyers are
opting for heavier vehicles that offer more functionality and
typically deliver richer margins for auto makers.
U.S. auto sales inched up 0.5% during the first three quarters,
and analysts are questioning whether 2016's total will surpass last
year's record sales of 17.5 million light vehicles. Passenger cars
are taking the hit, down 8.2% compared with the first nine months
of 2015, says 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. Data provider J.D. Power estimates
spending on discounts and rebates hit a record in September as car
makers worked to grease demand and clear dealer lots to make room
for new production.
--Christina Rogers contributed to this article.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
October 12, 2016 02:53 ET (06:53 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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