GM Cuts Production for First Quarter 2009

GM made drastic cuts to its production plan for the first quarter of 2009, a chilling reminder of the ongoing drop in U.S. auto sales.

Production plans are the truest expression of a car company’s near-term outlook. As such, GM’s cuts add even more urgency to the ongoing bailout discussions in Washington.

GM said factories representing about 30 percent of its North American volume will be temporarily idle in the first quarter, removing about 250,000 units from production. U.S. auto sales are so poor that GM’s rivals, including import-brand factories in North America as well as Ford and Chrysler, are likely to follow suit.

“The speed and severity of the U.S. auto market’s decline has been unprecedented in recent weeks as consumers reel from the collapse of the financial markets and the resulting lack of credit for vehicle financing,” GM said in a Dec. 12 announcement.

U.S. auto sales fell 36.7 percent in November from the year-ago month, on top of a 31.9 percent drop in October, according to AutoData Corp.

GM’s temporary shutdowns affect plants in Canada, the United States and Mexico, and include cars, which had been selling well; plus big pickups, SUVs and crossovers.

Production cuts at GM’s final-assembly plants will have an immediate ripple effect on suppliers, and on GM’s own parts plants, which build engines and other components.