Like Ford, GM Also Cuts Production on Weak Truck, SUV Demand

General Motors Chairman and Chief Executive Officer Rick Wagoner announced this week that GM will cut production. He made the announcement hours after Ford Motor Co. announced a 21 percent cut in fourth quarter production because of a sharp drop in sales of fuel-guzzling trucks and sports utility vehicles.

From Xinhua Financial News

DETROIT — General Motors Chairman and Chief Executive Officer Rick Wagoner announced this week that GM will cut production. He made the announcement hours after Ford Motor Co. announced a 21 percent cut in fourth quarter production because of a sharp drop in sales of fuel-guzzling trucks and sports utility vehicles.

"I’m not sure that’s bad news," Wagoner said of his company’s cuts Friday. "The fact is, you’ve got to build from market demand back. That’s what it seems to be these actions are all about."

GM trimmed production 7-8 percent during the summer and has scaled back production of new full-size sports utility vehicles by suspending overtime, said Wagoner, who declined to detail his fourth-quarter production targets.

"I think the fuel price situation has been a little surprising to everyone," Wagoner said during an appearance in suburban Detroit.

"It would have been hard to predict, for example, the current issues we have in the Middle East. These things hang out there. We have to react to that."

Wagoner noted GM will be launching a number of new cars and crossovers that offer better fuel economy later in the year.

He said he is growing more optimistic about GM’s future although he warned that sales will be weak in the coming months.

Sales last year were driven up by big incentives and GM made a deliberate decision to hold down sales to rental fleets this year, Wagoner said.

"I think what we’ve doing is beginning to paying some dividends as far as some of the cutbacks early in the year," Wagoner told reporters. "We’ve been able to get a little more steady pace of retail sales without the kind of incentives and the costliness of the incentives we were running a year ago."

The decision to move ahead with the development of the Chevrolet Camaro is one sign of how GM, which lost $10.6 billion in 2005, has changed over the past year, he said. GM had abandoned the so-called muscle-car segment earlier in the decade.

"It’s an exclamation point on our commitment to do great cars and trucks,” Wagoner said after the showing off the Camaro during the annual Woodward Dream Cruise.

"It talks profoundly about a new way of doing business at GM," he added.

Wagoner emphasized there was nothing new to report on the ongoing discussion with Renault-Nissan.

"It’s moving along according to an expected schedule," said Wagoner, who indicated both sides are still exchanging and collecting information.

Wagoner also noted he remains optimistic about the prospects for settlement between Delphi and its various unions. The talks are complex but they have not broken down, he said.