GM supply numbers still show some trouble spots
DETROIT — Even after cutting more than 6,000 jobs this year, General Motors might need to further shrink its manufacturing operations to address bloated inventories of some vehicles amid plateauing U.S. sales and pressure from Wall Street to avoid overproduction.
The majority of GM's U.S. assembly plants, including some where a shift already has been eliminated, produce vehicles that on average have at least an 80-day supply, 33 percent more than what the industry generally considers healthy, according to estimates from the Automotive News Data Center.
"The danger zone is definitely consistently staying in that 80 to 100 days," said Joe Langley, a senior analyst at economic forecasting and data company IHS Markit. "The ultimate red flag is when volume is at that 120 days or more consistently and incentives aren't moving the needle."
GM has at least seven U.S. assembly plants that on average produced vehicles with greater than an 80-day supply entering October, including four that have more than 100 days, according to the estimates. That does not include GM's two U.S. plants for the Chevrolet Silverado and GMC Sierra, because pickups commonly have higher inventories to meet demand for a variety of trim and feature configurations.
Overall, production cuts GM has made since January have helped drive the automaker's U.S. inventory levels to a 76-day supply as of Oct. 1 — down from about 100 days for most of the year and on pace to hit GM's target of 70 days or less by year's end.
But with U.S. sales expected to decline in 2018, analysts say the automaker still may need to do more.
GM spokesman Tom Wickham declined to comment on any potential future production cuts, saying only that the company will match supply with demand.
"We've taken a number of steps this year to bring production in line with demand," he wrote in an email to Automotive News. "We'll continue to monitor market demand and make appropriate adjustments."
GM this year has added downtime, slowed assembly lines and cut shifts at several U.S. plants to reduce production. The actions include ending shifts at car plants in Detroit; Kansas City, Kan.; Lansing, Mich.; and Lordstown, Ohio, as consumer preferences shifted to utility vehicles.