General Motors Corp. has further reduced its North American truck production plan and added no-interest loans on many 2008 models after a consumer shift to cars contributed to a 16 percent drop in its U.S. sales through May.
GM this year will trim output of pickups, sport-utility vehicles and vans by an additional 170,000 this year, spokesman Tony Sapienza said Monday. The Detroit-based automaker also said that for the rest of this month it will offer the interest-free financing on loans of as long as six years.
Saturn production at Spring Hill, Tenn., will not be affected for now.
The largest U.S. automaker's sales in its home market fell almost twice as much as the industry’s 8.4 percent drop through last month, as GM’s light-truck total slid 22 percent. Gasoline prices hovering around $4 a gallon have driven down GM’s sales of large pickups and SUVs.
“No one knows where the bottom is in this sales environment,” said David Healy, an analyst at Burnham Securities Inc. in Sierra Vista, Ariz. “GM has plenty to be worried about since they derive so much of their sales from these large trucks.”
GM fell 88 cents, or 6.4 percent, to $12.91 yesterday in New York Stock Exchange composite trading, for its lowest close since February 1982. The shares have slid 48 percent this year.
The company will idle seven pickup and sport-utility vehicle plants in the U.S., Mexico and Canada for as long as 12 weeks this year under its latest production cut, Sapienza said. The reduction is in addition to a plan to close four North American factories and reduce output by 500,000 units by 2010.
The automaker yesterday also said it plans to boost output of cars and smaller, more fuel-efficient SUVs by 47,000 units at North American plants this year, through overtime and Saturday shifts. The increase is aimed at models that are gaining sales, such as the Chevrolet Malibu sedan and GMC Acadia SUV, a so-called crossover that combines car and light-truck features.
GM relies on sales of light trucks such as the Chevrolet Silverado large pickup and Cadillac Escalade big SUV for more than 60 percent of its annual U.S. sales. The automaker may see four times the profit on the sale of an SUV than a small car, according to Citigroup analyst Itay Michaeli.