We recently got bad news from Stellantis, the parent company of Chrysler/Dodge/Jeep about layoffs. Now we are also hearing similar bad news from GM. What’s going on in the US auto market?
Here are Five Fast Facts about GM’s upcoming layoffs:
- 📉 The Landscape - US auto sales did well in the first half of 2024, but have slowed to a drunken crawl since then, with final expectations of just 1.3% growth over 2023 (and most of that is from commercial sales rather than higher margin consumer sales). A nasty combo of high inventory and uncertainty about the economy is driving prices down. While that’s great for buyers, it causes problems for automakers like GM.
- ⚠️ Early WARNing - GM recently filed a WARN (Worker Adjustment and Retraining Notification) notice of the upcoming layoff. The WARN Act is a labor law from 1989 that protects workers by forcing large companies to give a heads up and explanation before mass layoffs are coming. Hard to know if that’s better or worse, but it’s the law.
- 👋 Bye Bye - GM has said it will eliminate over 1,000 jobs, almost two-thirds of which are in the Global Technical Center in Warren, MI. They are saying it’s to make their workforce “sleeker” and more efficient. Keeping one’s job does have a tendency to spark better efficiency, doesn’t it?
- 💻 Techie Targets - The bulk of the jobs being lost are actually tech jobs. This is quite a change in direction, as GM has been focusing heavily on software, autonomy, and other services in recent years, with the expectation of generating an additional $25 billion in revenue there by 2030. Or maybe not, now.
- 💲 It’s The Affordability, Stupid - Most American automakers have gotten themselves stuck between a rock and a hard place. Between an almost 50% increase in new car prices since pre-pandemic and almost doubling interest rates, consumers are saying overwhelmingly, “we need cheaper cars!” Too bad every American automaker has given up on all of the cheap car segments. Oops.
🔥Bottom line: Sure, it’s fun to drive a nice fancy car if you can afford it, but many people need their cars in order to work, get to school, and generally live their lives. Having only super expensive options isn’t good for anyone - eventually, you run out of wealthy people to buy them, so even the car makers lose out. All this bad news of layoffs is a sign that things have already taken a few wrong turns.
What do you think will fix this important industry?
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