General Motors Corp., still unable to meet demand for fuel-efficient small cars, will keep its sole U.S. compact-car factory running on overtime for the remainder of this year, the auto maker said Friday.GM is running short on Chevrolet Cobalt cars despite adding a third shift this summer at its Lordstown, Ohio, assembly plant.
GM spokesman Chris Lee said the company hopes the weekend work at Lordstown will deliver sufficient supply by next year. The factory will run two shifts every Saturday for the rest of the year, except for the Thanksgiving and Veterans Day holiday weekends, he said.
Cobalt sales fell 17% last month from a year earlier, a drop GM attributed to short supply. Still, Cobalt sales for the year are up 6%, while GM's sales overall have fallen 18% in a weak U.S. auto market.
Sales of the compact Toyota Corolla and Honda Civic models also fell last month.
Dealers across the U.S. have fewer than eight weeks' worth of the Cobalt, Corolla and Civic in stock, according to Wardsauto.com. The industry norm is to have at least a 10-week supply. The Ford Focus, with roughly a 13-week supply according to Wards, saw a 5% bump in sales last month.
"The increased availability is still kind of out in front of us," GM's global sales analyst Mike DiGiovanni said during a sales conference call, referring to Cobalt production.
GM and many of its rivals have been racing to retool U.S. manufacturing operations that had been geared toward building large trucks and sport-utility vehicles, which are falling out of favor with Americans pinched by high gasoline prices and a sputtering economy.
The compact-car segment had been an afterthought for Detroit auto makers, and the companies made little or no profit on U.S.-built passenger cars because of high labor costs and an inability to command the high sticker prices of Japanese rivals.
But the segment has become increasingly attractive as consumers downsize their vehicles and become willing to pay more for small cars.
To address the market shift, GM had said it would close four truck plants by 2010. The auto maker said Friday that on Dec. 23 it will close one of those factories, a Moraine, Ohio, plant that builds SUVs. Dramatically reduced demand for midsize SUVs, such as the Chevrolet Trailblazer and GMC Envoy, led GM to close the plant more quickly than expected.
GM has no plans to build car-assembly plants or convert truck factories and instead will manage increasing demand for cars by adding shifts at existing locations.
Ford Motor Co., however, plans to convert some of its truck plants to car factories. Toyota Motor Corp. has said it plans to begin building its Prius hybrid in the U.S. And Honda Motor Co., which already had a portfolio geared toward passenger cars, is opening a plant to build four-cylinder engines in Canada with a capacity of 200,000 units.
GM is building a small-engine plant in Flint, Mich., scheduled to open in 2010. An engine shortage at GM's Tonawanda, N.Y., plant forced the auto maker to cancel overtime shifts at the Lordstown factory last month, according to United Auto Workers officials.
By: Sharon Terlep
Wall Street Journal; October 6, 2008
