GM pauses pickup production for 10 weeks as inventories climb
General Motors will idle all three of its US full-size pickup plants for 10 weeks to manage a spike in unsold inventory ahead of launching redesigned Chevrolet Silverado and GMC Sierra models.
General Motors will suspend production of its full-size pickups for 10 weeks, idling all three of its US truck plants as the company manages a sharp rise in unsold inventory and prepares to launch redesigned Chevrolet Silverado and GMC Sierra models in the second quarter of 2013.
The move comes after GM's pickup inventory jumped 24% in January, reaching a 117-day supply at the end of the month, up from 80 days in December. Company data showed 234,342 full-size pickups in stock at the end of January, 45,774 more than a year earlier and above the firm's 220,000-unit target set for the close of 2012.
GM's decision to idle production, rather than resort to heavy discounting, is aimed at protecting both the brand and future resale values. With the outgoing Silverado and Sierra due to be replaced by updated models, the company is using the 10-week shutdown to retool its plants for the new trucks while reducing excess stock.
Why GM is pausing its pickup lines now
Full-size pickups remain a key profit driver for GM, especially in the US where the Chevrolet Silverado and GMC Sierra compete directly with Ford’s F-Series and Ram’s pickup range. The company ended 2012 with inventory levels close to target, but a slower start to 2013 sales left dealers with more unsold trucks than planned. Rather than risk a glut of old-model pickups on forecourts as the new models arrive, GM is taking the unusual step of stopping production entirely for more than two months.
The three affected plants build both the Silverado and Sierra. The company has not announced any layoffs, but a 10-week pause will impact plant workers, suppliers and logistics providers tied to GM's US truck operations. The company’s approach contrasts with rivals who sometimes use large incentives to clear outgoing stock, a practice that can erode brand value and depress used prices.
Preparing for new Silverado and Sierra models
The shutdown will also give GM time to change over its assembly lines for the next-generation Silverado and Sierra, which are scheduled to launch in the second quarter. These models are expected to arrive with updated styling, new technology and improved efficiency, targeting the heart of the US light truck market. The company is betting that a leaner inventory and a clean transition will support dealer margins and maintain interest in the new arrivals.
