Is General Motors Company (NYSE:GM) Losing Ground

July 24, 2017, 10:59 am ET, BY Simon M.- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

Recent news reports indicate that General Motors Company (NYSE:GM) is considering cancelling at least six models that have consistently reported declining sales. The slump in US auto sales has hit General Motors extremely hard given that most of the automaker’s sales are generated from the US.

The company is currently in talks with the United Auto Workers, which is the autoworkers’ union in the US, on the threat to US auto jobs posed by the declining auto sales. GM is considering replacing or discontinuing different models made at six of its US plants, which are presently underused.

Some of the models that are being considered for cancellation include passenger cars such as Cadillac CT6, Buick LaCrosse, Cadillac XTS, Chevrolet Sonic, Chevrolet Impala and the Chevrolet Volt. The discontinuation of these models could cause thousands of GM employees to lose their jobs due to the closure of various manufacturing facilities.

Meanwhile, one of GM’s popular electric vehicle models, the Chevrolet Bolt might be facing production issues given that GM suspended operations at its Michigan facility for longer than usual in July. This is despite the fact that the current stock of Chevy Bolts in the markets is not significantly higher than the normal demand.

Although the Chevrolet Bolt and the Tesla Inc (NASDAQ:TSLA) Model 3 are very different cars, the two models compete based on their longer mileage in the electric vehicle category. Currently, the Chevy Bolt is the only EV that can compete with the Tesla Model 3 in terms of mileage.

However, Tesla is about to launch mass production of the Model 3 including the positive press coverage of the model as compared to the Bolt, which indicates trouble for the Bolt. GM has to market the Bolt aggressively in order to compete effectively with the Model 3, which has pushed the Chevy Bolt into obscurity in the electric vehicle category.

GM faces an uncertain future due to the declining US auto market and the stiff competition from other brands such as Honda, Toyota, Nissan, Mercedes, Volkswagen, Fiat-Chrysler and BMW among others, which spells a tough future for GM.

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