GM to Cut Truck Output, May Sell Hummer
General Motors initiated a series of steps on Monday from cutting production of trucks to offering aggressive incentives to combat the drop in demand for large vehicles amid record-high gas prices.
The production cuts and increased incentives come as the largest U.S. automaker struggles with a deepening slump in U.S. auto sales amid a consumer exodus from pickup trucks and SUVs.
"We really want to spark the market at the end of the month," GM's U.S. sales chief Mark LaNeve said. "We want to close the quarter strong."
GM also said it hired Citigroup to help review its Hummer brand that the automaker is looking to sell or revamp.
"They will be able to assist us quite a bit in going through options for the brand and in addition, potential offers that we may get from potential buyers," LaNeve told reporters.
LaNeve, who declined to name any potential buyers, said Citigroup will help evaluate all options, including a complete revamp of the lineup, partnerships or licensing.
GM announced earlier this month it was reviewing Hummer and could sell the military-derived SUV line, which has become synonymous with gas-guzzling excess and has hurt GM's image at a time when consumers are demanding more fuel efficiency.
LaNeve said no other GM brands were under review.
In response to the decline in demand for larger vehicles, GM will decrease production of pickup trucks and SUVs by 170,000 units but increase output of cars, crossovers and vans by 47,000 units during the second half of the year.
GM will temporarily idle several North American truck plants starting next month and schedule overtime for workers at plants that build cars, crossovers and vans through the second half of the year.
GM assembly plants in Fort Wayne, Indiana; Arlington, Texas; Janesville, Wisconsin; Moraine, Ohio; Silao, Mexico; and Oshawa, Ontario, will be shuttered for anywhere from one to 10 weeks between July and the rest of the year.
GM's announcement follows rival Ford decision on Friday to cut truck production and delay the launch of its redesigned top-selling F-150 pickup truck to clear swollen inventory of vehicles.
GM is offering interest-free loans for 72 months on most of its 2008 model-year vehicles, LaNeve said.
The offer will begin on Tuesday and last until June 30.
The automaker, however, also plans to raise average prices for its 2009 models by 3.5 percent to reflect additional vehicle features and higher commodity prices.
GM's U.S. sales are down 17 percent through the end of May from a year earlier, led by a 23 percent drop in truck sales.
In May, GM's truck sales tumbled nearly 40 percent.
U.S. sales for June industry-wide were "fairly soft," LaNeve said.
Auto analysts painted a grim picture for the sector in June with seasonally adjusted annual sales expected to come in as low as 12.5 million units.
GM shares tumbled on Monday to their lowest level in 33 years on concerns about weak U.S. auto demand in June and the rest of the year.
GM shares hit a low of $12.75 at one point on Monday before closing down 88 cents, or 6.38 percent, at $12.91 on the New York Stock Exchange.