General Motors reportedly is cutting 300 to 400 jobs and slowing production at its Saturn assembly plant in Spring Hill, Tennessee, because of slow sales of the Ion small car.

According to the Detroit News, the automaker told employees this week it will reduce the number of work crews in the plant from three to two, from September 7 – the plant now operates with three crews of 300 to 400 workers over two shifts, six days a week.

GM will offer some idled workers a special separation package that has not been finalised while oher employees will be reassigned, the report said.

The paper said the factory employs 5,600 workers, including those who build the Saturn Vue sport utility vehicle.

“It’s unfortunate that we’re making this production adjustment,” GM spokesman Dan Flores told the Detroit News. “But we couldn’t justify production at the current level given market demand.”

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The motor city newspaper noted that Ion sales are down nearly 10% so far this year compared with the first seven months of 2003 while lagging demand has forced Saturn to idle the Ion production line for 13 weeks over the past 10 months.

Small car sales have dipped about 1% so far this year, with demand for the Ford Focus, Toyota Corolla, and Chevrolet Cavalier is down as well, the Detroit News said, adding that some buyers are shifting to small SUVs, used cars and mid-size sedans, where competition has lowered prices.

Saturn’s Tennessee plant has produced 64,040 Ion models this year. At that rate, the factory would produce about 109,000 vehicles this year, compared with 138,008 units in 2003, the report noted.

Introduced two years ago to replace Saturn’s first vehicle, the S-series, the Ion has struggled to catch on with consumers, the Detroit News said, adding that some criticized the Ion for its low-grade interior, uncomfortable seats, small steering wheel and centre-mounted instrument panel.

With the demise of the mid-size L-series line, Saturn has revamped and made improvements to the Ion for the 2005 model year to boost sales and appeal, the paper added.

The Detroit News said GM will also idle 2,200 workers for three weeks at its Lansing car assembly plant beginning August 23. The plant builds the Chevrolet Classic and Pontiac Grand Am, which are sold only to rental car companies, government agency and businesses, the paper added.