General Motors last night confirmed it is scheduling “multiple down weeks” at 13 assembly plants in North America, taking out about 190,000 vehicles from its production schedule in the second and early third quarter of this year.
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GM said dealer vehicle inventories were high, given the current depressed market, and said the shutdown would allow it to bring production in line with current market demand.
“The downtime actions also consider the possible production implications of the complicated and difficult negotiations with Delphi and its debtor in possession lenders,” GM said in a statement.
“We believe that continuity of supply to GM will be best assured by resolving the issues that will allow Delphi to emerge successfully from Chapter 11,” Delphi spokesman Lindsey Williams said in a statement.
“We’re taking aggressive steps to accelerate our inventory initiatives that have worked well since the first of the year. While sales have been performing at or close to our plan estimates, and dealer inventories have been reduced accordingly, we want to more closely align inventories with even more conservative market assumptions,” said GM North America president Troy Clarke. “By reducing our inventories even more aggressively we reduce pressure on GM and our dealers, and set ourselves up well for a clean 2010 model year start-up.”
GM said it had been in negotiations with Delphi and its lenders to ensure its source of supply under fair and reasonable terms.
“While GM has proposed a potential solution that would allow for the successful and rapid resolution of Delphi’s bankruptcy case, its lenders have rejected this proposal,” the automaker said.
“Without the successful resolution of this dispute, it is General Motors’ view that Delphi or its lenders could force GM into an uncontrolled shutdown, with severe negative consequences for the US automotive industry.
The plant down weeks will be staggered and vary in length, based on inventory levels and expected demand.
Corresponding down weeks are also scheduled at GM’s stamping and powertrain facilities. The scheduling changes do not, however, affect plants launching new products such as the new Chevrolet Camaro built in Canada and the Buick LaCrosse SUV launching soon at the Fairfax, Kansas, assembly plant.
At the end of March, approximately 767,000 vehicles were in US dealer stock, down about 12% or 108,000 vehicles compared with the same period last year, and down 105,000 vehicles from year-end 2008, GM said.
“These new scheduling actions will help reduce US dealer inventory levels to a level of approximately 525,000 vehicles by the end of July,” the automaker added.
