GM idles Orion Assembly to cut car inventory
General Motors Co. said it is idling production of its Orion Assembly Plant this week to trim stock of the slow-selling subcompact Chevrolet Sonic. The extra week off extends a two-week shutdown at the Orion Township plant the first two weeks of the month related to the automaker’s summer shutdown period during which many plants close for maintenance or model changeovers.
To further cut Sonic production, the plant will idle production the last week of August, according to sources familiar with the automaker’s plans. Then in September, GM plans to slow the combined assembly line at Orion that produces the Sonic and Chevrolet Bolt EV, according to one source familiar with the automaker’s planning.
The efforts to cut supply to match demand take place as car and sedan sales are in decline across the industry. GM is working to reduce its inventory of cars that analysts say was at 127 days at the end of June; that’s about double the 60- to 70-day supply that analysts consider optimal. Sonic sales through June were down 36.5 percent compared to the first half of 2016.
The automaker already has cut shifts at four assembly plants — three of them car plants — since the beginning of the year, and announced it will cut the third shift at is Fairfax Assembly Plant in Kansas City, Kansas, in September. The Fairfax plant builds the Chevrolet Malibu sedan.
It’s also implemented production downtime various weeks at a number of its car factories. GM is taking extended production downtime at its Oshawa Assembly Plant in Ontario this month. The plant’s Flex Line, which builds the Chevrolet Impala and Cadillac XTS sedans, shut down for July.
GM spokesman Jim Cain said the Sonic supply cut came as its sales reached 6,550 — better than the sales pace in recent months but still down year-over-year — in the U.S. last month. Sonic sales were aided in June because of a stop-sale of the Chevrolet Spark minicar related to a recall issue, he said.
Inventory of the Sonic was at 43 days’ supply at the end of June, down significantly from 159 at the end of May, according to Autodata Corp.
The automaker is forecasting that already hot-selling trucks and SUVs will represent an even larger percentage of its sales in the final six months of the year vs. cars, Cain said.
“You have to anticipate where the market is going,” he said. “The second half of the year sees a major shift toward SUVs and pickups. Passenger cars become a smaller part of the industry.”
The automaker has been building inventory of pure electric Bolt EV, which in August becomes available in all 50 states. The plant began producing the Bolt late last year and initial inventory had been targeted to certain states only. The Bolt EV had 112 days’ supply at the end of June, up from 104 at the end of May.
The Orion plant employs about 1,150 hourly and salaried workers.