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General Motors Co. is laying off 510 workers at two Michigan auto plants that build smaller cars in a era of low gas prices, rising demand for SUVs and crossovers and a disciplined strategy to cut production instead of raising incentives to move vehicles off dealer lots.

Late Tuesday, GM spokesman Bill Grotz told The Detroit News it will lay off 350 workers at its Lansing Grand River Assembly in January to "adjust plant production capacity to better align with market demand" as it cuts one of two shifts. About 350 workers on the second shift will supplement the first shift.

Those layoffs are in addition to the phased layoffs of 160 of the nearly 1,470 hourly workers at GM's Orion Assembly plant in Orion Township that Grotz confirmed earlier in the day. Those layoffs, which begin in January, will conclude by the end of 2015. The plant builds the small Buick Verano and subcompact Chevy Sonic cars.

The Grand River plant builds the compact Cadillac ATS and ATS Coupe, and the midsize Cadillac CTS. Beginning in January, the Grand River plant will operate on a single shift until production of the next-generation Camaro starts.

"We see these jobs coming back when production of the Camaro comes," Grotz said in a phone interview. He would not say when the next-generation Camaro is expected to begin production, but GM has confirmed the 2015 Camaro will be the last of the current generation. Analysts say the switch could come late next year as GM moves production from Oshawa, Ontario.

Grotz said GM is committed to a strong and lasting presence in Lansing. "Since 2013, GM has announced $281.5 million in investment for Lansing-based facilities, including $174 million for a stamping plant ... $44.5 million for a logistics optimization center and $63 million for Lansing Delta Township plant upgrades."

GM's overall inventory rose to 792,489 at the end of October, or 94 days, up from 81 days' supply at the end of September. Dealers had 166 days' supply of the ATS at the end of September, and 161 days' supply of the CTS.

"This is a good move by GM to bring supply back in line," Larry Dominique, president of automotive research firm ALG, said of the Cadillac decision. "I would expect a short-term, very high incentive spike, and then hopefully a reduction."

GM and Cadillac executives have recently said they would resort to production cuts instead of raising incentives to maintain GM's high average sales prices. That is part of the company's more disciplined strategy around incentives and inventory following its 2009 bankruptcy.

Dealer supply of some Cadillac sedans is high (ATS sales are down nearly 19 percent this year), and GM CEO Mary Barra told The Detroit News late last month it is a short-term issue that the company has to address.

She said GM will remain disciplined in its strategy of matching supply with market demand, an approach that helped to improve average sales prices. She declined to comment then on whether GM would cut Cadillac production or eliminate a shift.

In August and September, GM idled production for three weeks at Lansing Grand River to trim inventories of the ATS and CTS.

Gas prices a factor

Barclays analyst Brian Johnson said lower gas prices are helping fuel the shift away from traditional cars.

"Consumers are choosing SUVs over cars, especially in an environment of cheap gas," he said. "We expect cheap gas to continue driving the purchase of large vehicles (SUVs/pickups) for the remainder of 2014 and" into 2015.

GM said its U.S. car sales year-to-date are up just 1.5 percent, while crossover utilities are up 1.9 percent and trucks are up 7.9 percent. GM sales overall are up 3.9 percent this year.

In September, Ford CEO Mark Fields said the Dearborn-based company was seeing "a fundamental shift from cars to utilities and we absolutely have plans in place to actually expand our portfolio of utilities."

In the first 10 months of the year, U.S. sales of cars at Ford were down 3.8 percent, and down 11.5 percent in October. Meanwhile, Ford's sport utility sales were up 2.9 percent for the year — and up 10.3 percent in October.

At Chrysler, car sales are down 15 percent this year, while light trucks — SUVs, minivans and pickups — are up 30 percent.

In March, Chrysler Group temporarily laid off more than 300 employees for a week at its Belvidere Assembly Plant in Illinois because of slow sales of its compact Dodge Dart.

Chrysler sold nearly 71,500 Darts through October, a 5 percent decrease from the same time period a year ago. The automaker sold fewer than 83,400 Darts in 2013.

Sales of the Fiat 500 minicar also have struggled for the Auburn Hills unit of Fiat Chrysler Automobiles NV. Through October, sales of the hatchback and convertible are down 6 percent to fewer than 29,500 cars in the U.S.

Tom Libby, IHS Automotive manager of loyalty solutions and industry analysis, said the growth of crossover vehicles is an industry-wide phenomenon: "They're not just taking from small cars and subcompact cars, they're really taking from everywhere. The crossover is really, really resonating with the consumer."

Orion to lessen output

Production cuts at Orion Assembly will result in GM reducing capacity at the plant from 45 to about 37 cars per hour, about a 18 percent cut.

Verano sales were down 7.3 percent in October and down 6.2 percent this year to 37,391. Sonic sales fell 23 percent in October, but are still up 8.8 percent for the year to 83,210. GM has large supplies of unsold Sonics and Veranos on dealer lots.

Orion Assembly, which runs on two shifts, also was down the week of Oct. 27 to complete scheduled maintenance and to manage production, according to a plant spokesman.

Representatives of UAW Local 5960 could not be reached.

GM announced plans to close a dozen plants during its 2009 bankruptcy, including six in Michigan; it ultimately reversed its decision to close Orion Assembly after the UAW made significant concessions. Historically, small-car production for U.S. automakers has been largely unprofitable — especially in the United States.

dshepardson@detroitnews.com

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