This past month, both Ford and GM have announced major layoffs and cutbacks in production. They are both axing their sedan models including the Ford Fusion and the Chevy Impala. On Monday, GM announced that they would be idling or shutting down 3 plants in Michigan, Ohio and in Canada. This is the final part of their restructuring that began with voluntary requirements. It’s not just factory jobs that are out, white collar workers in North America are being reduced as well. GM announced that it would focus on electric cars and autonomous vehicles.
The shift away from sedans is not surprising. Sedan sales, even in the Cadillac division are abysmal. Americans prefer SUVs and now small SUVs have good or better gas mileage than cars and Americans are going for the larger SUVs instead of regular sedans like the Fusion and Impala. Small cars are under pressure as well. Ford axed its the Fiesta for North America and GM is ending the Cruze and the Volt.
The closing of the Lordstown, Ohio plant is especially bleak for it’s workers because the President promised that “the jobs are all coming back.” Last year and now, those workers will be collecting unemployment and looking for new work which will most likely require them to move.
The recent steel tariffs have certainly not helped the situation and it appears the tax cuts did not spur GM to save any of the cars that would keep these plants open. Consumer tastes have changed (as they often do) and the U.S. auto industry is trying to catch and be more nimble and streamlined.
Foreign competition has always troubled the US automakers. When cheap, fuel efficient Japanese cars arrived in the 1970s, US automakers were caught by surprise and have never really recovered. However, while it might be easy to blame globalization and foreign competition, Toyota is having no problems selling sedans. Perhaps it has less to do with consumer taste and more to do with the fact that Americans just don’t won’t American-made sedans from these brands. Despite refreshes and big marketing campaigns over the past few years, the domestic automakers just can’t keep up with what consumers want out of a sedan and are instead abandoning the segment and moving into what they do really well: SUVs and trucks.