GM’s announcement on Monday to not allocate new product to five plants as well as slash its white collar workforce doesn’t nearly address all of its overcapacity problems, which currently amount to some one million units per year. More cuts seem inevitable. GM stock this morning lost most of what it gained yesterday.
Meanwhile Toyota USA has announced a number of new versions of its sedans, including an AWD Prius (with toned down styling), a hybrid Corolla, and TRD versions of its Camry and Avalon. Toyota is determined to keep its sedan plants humming, including a brand new plant in Mississippi that builds the Corolla.
More on both after the jump:
First, the bad news:
Assuming that GM does close the three assembly plants ( Michigan, Ohio, Ontario) that it is targeting, it will still have four plants building cars (not trucks) operating at well below capacity. That compares to one car plant each for Ford and FCA after 2019.
According to an Autonews article, these plants include:
Fairfax, Kan., which builds the Chevrolet Malibu and Cadillac XT4 compact crossover. But that plant is operating at 48 percent of capacity, well below the 80 percent that GM CEO Mary Barra is targeting as the average for North America.
A GM plant in Lansing, Mich., that builds the Cadillac ATS and CTS and Chevrolet Camaro is running at just 33 percent capacity, while the GM Orion Township, Mich., facility that builds the Chevrolet Bolt electric car and the Chevrolet Sonic subcompact runs at 34 percent capacity. A Bowling Green, Ky., plant that builds the Chevrolet Corvette works at just 27 percent of its potential output, according to LMC data.
80+% plant utilization is considered essential to generate profits. Chrysler’s Brampton, Ontario plant that builds the 300, Charger and Challenger, which are still selling quite well, runs at about 80% capacity.
It’s quite clear that all of these GM plants are operating at losses.
“Until GM gets more flexibility in its platforms, it will continue to have to play whack-a-mole with its plants as the market transitions — and it will happen again,” said LMC analyst Bill Rinna.
In all, the four GM car plants that will remain open have a combined capacity of more than 800,000 vehicles a year, but are expected to produce only 360,000 cars this year, according to LMC.
Platform flexibility is a key factor here. And it’s one that GM clearly lags in, unlike Toyota, which has underpinned almost all of its new sedans, hybrids and small-mid CUVs (like its brand new Rav4) on its NGP (New Global Platform).
The result is that it can repackage features and build multiple models in the same plant. One mix-and-match new model is the Corolla hybrid, which is essentially a Prius in a Corolla wrapper, for those that don’t like that wrapper.
Speaking of the new Corolla, Toyota’s primary target are various ethnic groups. The Corolla has long been extremely successful in So. California with Latinos, and also with other ethnics. Toyota intends to work hard to keep it that way.
I already showed it at the top, but adding AWD to the Prius is long overdue, in my opinion. I’ve seen a lot of former Prius drivers here in Eugene replace them with Subarus, especially the Crosstrek, for lack of AWD. The Prius AWD-e adds an additional electric motor mounted under the rear seat to drive the rear wheels as needed. I would have added some body-colored fender flares and an inch or so of increased ride height, even if it did compromise fuel efficiency a bit. Toyota is lacking a competitor to the hot Crosstrek, whereas Subaru efficiency is not the greatest. This Prius AWD-e may go some ways to plug that hole.
Some of you may laugh at a TRD Camry and Avalon (especially the latter), but I have to tell you that out here on the West Coast, especially in California, “tuner” Camrys are surprisingly popular with younger drivers, especially young Latinos and Asians, which make up a significant percentage of the market out here. Toyota intends to capitalize on that with these new TRD versions.
They include a full aero body kit, matte-black 19-inch alloy wheels, painted brake calipers, red TRD badging and a flashier interior with red accents.
As per this autonews article:
Toyota said it saw a sales spike for sportier SE and XSE trims of the Camry when the 2018 model debuted on the Toyota New Global Architecture, which allowed for better handling. With the TRD variant, Toyota is betting there’s still more volume, and perhaps even some passion, to be captured among driving enthusiasts from its conventional sedan nameplates.
The TRD models come with the standard equipment from the Camry SE grade and Avalon XSE, but with chassis enhancements and tuning input from the racing development team. Both are powered by Toyota’s 301-hp, 3.5-liter V-6 — the same as on the Camry and Avalon XSE models — mated to an 8-speed automatic transmission, with paddle shifters.
Toyota gave the TRD sedans thicker underbody braces to improve torsional rigidity and a suspension package that makes handling and steering more precise. They will arrive in late 2019 as 2020 models.
Toyota is number one in the US market with light-vehicle sales, and its production capacity is heavily invested in that segment, so it’s clearly going all-out to protect its investment. Toyota USA did not meet its profit goals last year (along with so many others), and is also cutting staff and overhead, as well as increasing truck production to the extent possible.
But it’s also determined to make the most of its sedan line. And there’s a ray of hope when it come to sedans: Tesla’s Model 3 is of course a sedan and is red hot. In fact, the Model 3 is the highest revenue-generating sedan in the country, above the Camry. That might be both good and bad news to Toyota.