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GM Moves Away from Big Vehicles as Gas Prices Rise

June 03, 2008 04:19 PM
by findingDulcinea Staff
At its annual shareholders meeting, General Motors declared that it will shut down four plants that produce trucks, while devoting more attention to smaller cars.  

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The decision is a significant step for a company that has built itself around larger vehicles for some time. General Motors has been struggling to make profits since 2005, and lost $3.25 billion in the first quarter of 2008.

GM will also roll out a new line of compact cars and, in 2010, it will begin selling the Chevrolet Volt, an electric car. Chairman and Chief Executive G. Richard Wagoner Jr. said the company may sell off the Hummer brand, underscoring the company’s new shift toward smaller cars.

At the end of April, GM showed signs of what was to come. The company said it would lay off 3,500 employees, produce about 88,000 fewer pickups and cut SUV production by about 50,000. The layoffs will affect plants in Wisconsin, Michigan and Ontario and are scheduled to take place in July and September.

"If the market is going away, there's no sense making the vehicles," says James N. Hall, principal of the Detroit consulting firm, 2953 Analytics, in regard to GM's decision to cut down the production of trucks and SUVs.

GM has been one of the victims of an ailing American auto industry. Ford Motor Co. posted a 16-percent decline for the month of May, as sales of pickups and sport utility vehicles fell, thanks in part to the rise in gas prices, according to The Wall Street Journal.

Headline Link: GM to close four truck-producing plants

Background Information: GM lays off workers; UAW strikes

Related Topics: Automakers face tough road ahead

Reference: GM and the UAW

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