GM slashes Q1 output

General Motors will dramatically slash North American production to 425,000 vehicles in the first quarter of 2009 - less than half the total it built in the first quarter of this year.

Company spokesman Chris Lee said GM is cutting 175,000 units from the first-quarter forecast that it had issued on Dec. 2. The production cuts offer dramatic evidence that GM expects no letup in the sales slump that grips the entire auto industry.

GM is reeling from a 41 percent drop in its November U.S. sales. GM cited the U.S. market's rapid, deep slide and a lack of consumer credit as reasons for the production cutbacks.

So the automaker plans to produce fewer vehicles in the first quarter than rival Ford Motor Co., which plans to build 430,000 units. That hasn't happened since the second quarter of 1998, when GM production was hobbled by a strike.

GM, smarting from last week's Senate rejection of an emergency loan package, has scheduled temporary shutdowns at 20 plants in the United States, Canada and Mexico.

The shutdowns affect virtually all GM plants in North America. The only U.S. plants not named in the announcement were included in previous production cutbacks or will be permanently closed this year.

GM's production cuts are especially deep in comparison with the first quarter of 2008, when it built 885,000 vehicles. At the time, that was considered to be a poor quarter after the commpany lost 93,000 units of production during a strike at American Axle & Manufacturing Holdings Inc.

The production cuts in 2009 will start early in the first quarter, but Lee denied that GM was shutting all plants for January. "It's safe to say that most of our plants will be closed the week of Jan. 5," he noted.

Only a few GM plants will operate that week: Fort Wayne, Ind.; Flint, Mich.; Silao, Mexico; and the medium-duty truck line in Janesville.

Ford said on Dec. 2 that it planned to build 430,000 units, 38 percent less than first-quarter 2008. On Friday, Dec. 12, a Ford spokesman confirmed that the company is sticking with its current production forecast.

Chrysler is closing all assembly plants on Dec. 22 and 23, allowing for a two-week holiday shutdown through Jan. 5.

A spokesperson said Chrysler will close its Detroit Viper plant this week. Chrysler also eliminated a second shift at its Toledo, Ohio, North plant, which builds the Dodge Nitro and Jeep Liberty.