GM CEO’s comments fail to clarify future of Cruze

General Motors’ boss mary Barra had the chance last week to provide some much needed clarity about the future of the Lords-town-built Chevrolet Cruze. Instead, a statement from the chief executive officer regarding GM’s small car production did little to quell the anxiety of Mahoning Valley residents over the company’s plans for its manufacturing and fabricating complex.

Here’s the answer Barra gave Tuesday when she was asked about small cars losing money and whether the company had plans to turn things around:

“Last year, we had a focus, and we took several actions to improve the overall performance across our car portfolio, although as you saw, the shift in the market.

“[There is] significant pressure on cars especially in the U.S. so we continue to look for opportunities.

“We are well positioned though when you look at the fact that it was in the [2015] time frame when we invested in and launched the compact and midsize with the Chevrolet Cruze and Malibu. So we are well positioned with those being very robust architectures to continue to respond to the market place with very little capital investment as we move forward.”

At the risk of sounding like corporate ignoramuses, our immediate reaction to Barra’s comment was this: Say what?

What are “robust architectures?” And, what does the chief executive officer mean when she said that GM can respond to the marketplace “with very little capital investment as we move forward?”

Perhaps those and other such questions would have elicited responses from Barra had The Vindicator’s business writer Kalea Hall been allowed to participate in the earnings call the company held with auto industry analysts.

Hall was permitted to monitor the conference call, but was unable to ask questions.

Hall has reported extensively on the precipitous drop in 2017 in Chevrolet Cruze sales compared with 2016. Indeed, last month, the Cruze saw a 45.5 percent decline in sales – 9,245 units, compared with 17,278 sold in January 2017.

Year-over-year gain

By contrast, the giant automaker reported a 20 percent year-over-year gain in the crossover segment in January and a 7 percent gain in truck deliveries.

“This is a global phenomenon,” Charlie Chesbrough, senior economist for Cox Automotive, told The Vindicator’s Hall. “Consumers love crossovers and aren’t interested in cars anymore.”

There was a time when the Cruze was GM’s best-selling vehicle and won rave reviews for quality and affordability.

But then the market took a dramatic turn toward SUVs and trucks because of low gas prices.

As the inventory of unsold Cruzes rose last year, the production line slowed.

GM responded by eliminating the third shift at the Lordstown complex and suspending production for 10 weeks.

By contrast, the company reported quarterly earnings and revenue that beat analysts’ expectations.

According to CNBC.com, sales of crossovers, strong pricing and cost controls contributed to GM’s bright financial picture.

“The beat comes in spite of declining wholesale volumes, GM said Tuesday,” CNBC reported. “The company reduced inventories to meet slackening demand, and finished refreshing its high-margin crossover portfolio with the launches of the Chevrolet Traverse and Equinox, Buick Enclave and GMC Terrain. The company also plans to debut the Cadillac XT4 crossover.”

This year, the giant automaker will focus on high-margin trucks and SUVs, and is funneling money into new technologies, such as autonomous vehicles. In January, the company said it is seeking federal approval for a self-driving car.

GM plans to commit more than $8 billion in capital expenditures this year, $1 billion of which will be dedicated to autonomous vehicles, CNBC.com reported.

Where does the Lordstown assembly and fabricating complex fit in this grand design for the future?

No one is saying.

As we argued recently in this space, ignorance is not bliss when it comes to the future of a major driver of the region’s economy.

We would, therefore, urge Barra or her designee to meet with us to flesh out the comments she made last week to auto analysts.

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