Facing growing dealer inventories, General Motors is cutting back production at two of its plants to adjust supply and demand.
Not long ago, Canada was, according to ex-GM CEO Dan Akerson, the most expensive place in the world to build a car. A strong Canadian dollar meant that the cars and crossovers built at GM’s plants in Oshawa and Ingersoll, Ontario, weren’t as profitable as those built in the US or Mexico, where labor costs were significantly lower.
But even a newly weakened Canadian dollar isn’t going to save Oshawa.
News that GM will be sending some production of the Chevrolet Equinox to their Ramos Arizpe, Mexico plant passed without much fanfare – GM’s PR machine was much more interested in touting the move of the Cadillac SRX to Spring Hill, Tennessee. While the Equinox’s move to Mexico will backfill capacity at that plant, it spells another blow for the future of GM’s Oshawa, Ontario plant.
A report in Automotive News outlines how General Motors has committed to building a new Buick model at their plant in Russelsheim, Germany. According to AN, the logical choice is the next-generation Buick Regal, also known as the Opel Insignia, since this is a good fit for Buick, and it allows GM to use up some of the excess capacity that is currently plaguing their European operations. But for GM’s venerable Oshawa plant, this is not good news.
Automotive News reports General Motors will release Thursday the results of attorney Anton Valukas’s three-month independent internal investigation into how and where the automaker went wrong before recalling 2.6 million vehicles affected by an out-of-spec ignition switch linked to 47 accidents and at least 13 fatalities. The announcement will come at 9 a.m. Eastern via webcast, with what CEO Mary Barra says will be an “unvarnished” look at the events surrounding the recall. In addition, GM will have an update on plans for compensating victims of the switch, though the attorney heading up the affair, Kenneth Feinberg, says a formal announcement won’t come until a few weeks down the road. Reuters adds the Valukas report will likely exonerate Barra, former CEO Dan Akerson and other senior execs and board members of any wrongdoing over the recall, with “a number of people” to be formally dismissed from the company due to their ties to recall. The report will be turned over to the federal government by the end of June.
The government of Ontario has announced it will sell its shares in General Motors as part of an effort to fund new public transit programs in the Greater Toronto Area. But the move could end up hastening the demise of GM’s Oshawa plant, located in the same metropolitan area.
While the all new 2014 Impala is impressing reviewers, like Consumer Reports calling it this year’s highest scoring sedan, General Motors has decided to keep the outgoing Impala as a low cost option for fleet customers until 2016. According to Automotive News, the automaker had originally planned to keep the old Impala, branded the Impala Limited, in production for rental operators as well as government and corporate fleet customers, into next year. “The Impala Limited has done extremely well. Our fleet customers know the car and like it,” a GM spokesman said last week. “It’s a business opportunity that we want to continue to fulfill.”
The continued production of the Impala Limited means that the Oshawa Car Assembly plant in Ontario will remain open until at least 2016.
A brief memo from General Motors Canada confirmed that the Oshawa consolidated line, scheduled to close in 2014, will stay open until 2016. GM is citing strong market demand for the Chevrolet Equinox and the outgoing, Chevrolet Impala (sold as a fleet-only model) as a reason for the decision, but cautioned that ” All scheduling adjustments are subject to market demand”.
Under the terms of the bailout, GM must keep 16 percent of its production in Canada until it has repaid its loan obligations to the Canadian government, or until December 31, 2016. After that date, the future of Oshawa is uncertain.