General Motors Co. is halting production at its Fort Wayne, Indiana, truck plant for two weeks this spring “to help the company maintain optimal inventory levels,” Assistant Plant Director Cherry Weiland wrote in a Wednesday note to employees obtained by The Detroit News.
GM spokesperson Dan Flores confirmed the two-week shutdown at the light-duty truck plant will start the week of March 27. GM’s three other full-size truck plants in Mexico, Canada and Flint will not be affected.
“Fort Wayne Assembly production will be down for two weeks beginning March 27 in an effort to maintain optimal inventory levels with our dealerships,” Flores said. “The plant constantly reviews and adjusts production schedules according to customers’ needs. All actions taken are in accordance with provisions of the UAW-GM National Bargaining Agreement and the local agreement.”
The move comes after GM CFO Paul Jacobson told investors when GM released its full-year 2022 earnings Jan. 31 that the automaker will work this year on maintaining inventory levels that align with demand. The auto industry has had to rethink what level of inventory makes the most sense after dealers made do with even a handful of vehicles at times during the past few years. GM ended the year with around 50 days of supply on dealer lots and vehicles in transit, Jacobson said.
“We’re committed to actively managing production levels to balance supply with demand and are targeting to end 2023 with 50-to-60 days of total dealer inventory on a portfolio basis,” Jacobson said. “This is down 20-to-30 days from mid-2019 and is reliant on a continued improvement in logistical challenges the industry has faced.”
Flores noted GM’s “production is up over the past month while demand remains fairly consistent, leading to an increase in inventory. Therefore, as we stated on our earnings call, we are going to proactively manage inventory levels, including plant downtime. These kinds of actions were assumed in our 2023 financial guidance. “
GM expects another strong year in 2023 and is projecting adjusted earnings to be in the range of $10.5 billion to $12.5 billion. In 2022, GM had record pre-tax earnings of $14.5 billion, reflecting the strength of the industry with demand for new, pricey vehicles still strong despite the higher interest rates.
Cox Automotive Executive Analyst Michelle Krebs noted that “full-size pickup inventory has been increasing in recent months.” At the end of January, the light-duty Silverado had more than 100 days of supply and Stellantis NV’s Ram 1500 had 83 days, according to Cox data. Krebs said those figures are “hefty even in ‘the old days.'”
Demand for new vehicles for retail purchases is starting to lighten as affordability becomes more of an issue, but Cox still expects sales to increase year over year in February thanks to fleet sales gains.
“We have diverging markets today,” Charlie Chesbrough, senior economist at Cox Automotive, said in a statement. “New-vehicle prices remain high while used retail prices are now in decline. New inventory is slowly stabilizing while used supply is falling. However, I wouldn’t be surprised to see this situation change later in the spring. With many affordability-seeking vehicle buyers leaving the new market for the used, dealers may find they have too little used inventory, and price declines may reverse. And, OEMs may find they have too much new-vehicle inventory and be forced to be more aggressive with incentives to boost sales.”
khall@detroitnews.com
Twitter: @bykaleahall