Even though GM introduced its new Chevrolet Cruze to the market, the inventories have swelled as more buyers choose SUVs. General Motors said last week that it's planning to cut third shifts at two U.S. car factories. The car models in question, the Cadillac ATS and CTS, and Chevrolet Cruze and Chevrolet Camaro, haven't been selling as quickly as GM would like, and inventories have risen sharply.
That wasn't really a surprise. GM is far from the only automaker to see car sales slump as more and more buyers gravitate toward SUVs. But inventories of some of those models were already way out of hand by the time GM announced the shift cuts (which won't take effect until January, by the way. And until recently, GM executives- unlike some competitors - were upbeat about the prospects for the U.S. market. GM is saying that when sales soften, it will choose to reduce production of new vehicles rather than resorting to discounting to boost sales. The upshot is fewer vehicles sold, but the vehicles that are sold have higher prices and fatter profit margins.
That approach is good for a lot of different reasons, not least because it maximizes GM's profit margins. It should reward shareholders over time. But recent events have this GM shareholder wondering if that's really what the General has been doing.
