General Motors Co. plans tighter output limits for the new Buick LaCrosse sedan than previous models as the automaker attempts to end its habit of overproducing after leaving bankruptcy.
GM aims to keep a "75-day to 90-day" supply on dealer lots, consistent with similar premium models such as Honda Motor Co.'s Acura TL, said Susan Docherty, vice president of the GMC, Buick and Pontiac brands.
"This is a new day, we're going to make sure supply meets demand," Docherty said at a press briefing yesterday for the LaCrosse in Plymouth, Michigan. The tighter supply reflects GM's resolve "to make sure we're not overproducing."
GM, which exited Chapter 11 on July 10, plans to reduce its U.S. vehicle inventory to 550,000 by Dec. 31 from 904,000 at the end of 2008, she said. As GM's first-half production in North America fell to the lowest in at least 24 years, the supply of vehicles in the U.S. slid to 69 days on June 30 from 83 a year earlier, according to Ward's Automotive Reports.
Matching inventory to consumer demand helps an automaker avoid needing to liquidate stockpiles of unsold cars with cash rebates that reduce profit. Guidelines that the government's auto task force set as it granted GM federal aid assume the company will be profitable when annual U.S. industry sales reach 10 million, which some analysts say may occur this year.
The LaCrosse goes on sale next month, giving GM an early opportunity after emerging from court protection to apply its new emphasis on returning to profit.
Shedding Dealers
Honda considers a 60-day U.S. supply optimal, said Ed Miller, a spokesman for the Tokyo-based automaker. Detroit-based GM's supply goal of 75 days to 90 days for the LaCrosse is an annualized industry average for premium sedans, Docherty said.
Since filing for bankruptcy on June 1, GM has shed retail dealers in an attempt to reach 3,600 outlets by the end of 2010 from about 6,000 last month. Docherty said the number of Buick franchises will fall to 2,000 from 3,000 before bankruptcy.
Sergio Marchionne, the new chief executive officer of Chrysler Group LLC, said on July 1 that the automaker will make vehicles in proportion to demand instead of producing as many as possible and pressuring dealers to buy. Automakers can't "keep shoving cars down people's throats," he said in an interview. He also is CEO of Fiat SpA.
