2015/11/25

GM Playing It Smart With Booming Demand For New Midsize Pickups

Chevrolet Colorado is flying off dealer lots.
General Motors has a certifiable hit on its hands with the new Chevrolet Colorado mid-size pickup (and its cousin, the GMC Canyon). Though skeptics — well, mostly GM’s arch rival Ford Motor — wondered if there would be sufficient demand for a smaller pickup, GM has plenty of buyers for its more fuel-efficient and affordable trucks.
In fact, dealers can barely keep them in stock. The Colorado is the industry’s fastest-selling pickup truck, averaging just 24 days on dealer lots. Through October, GM sold 70,291 Colorados and 24,841 Canyons. GM is on pace to sell nearly 120,000 of the pickups this year compared with industry forecasts of around 80,000.
In GM’s bad, old days — that is, prior to going bankrupt – the company would have spent $1 billion or so on a brand new factory to meet soaring demand for its hot seller. It would have been great PR — General Motors is investing in the U.S. and adding thousands of jobs. But a few years down the line, when the “hot” model’s success proves fleeting, or when market conditions change, GM would be left with a costly, under-utilized factory and many of those employees would be out of work.
But this is the new, more fiscally conservative GM: Instead of opening a new factory to boost production of the Colorado and Canyon, GM is in talks to offload some production of its commercial vans to contract manufacturer AM General, according to Automotive News.
By shifting production of cutaway models of the Chevrolet Express and GMC Savana vans from its factory in Wentzville, Mo., to AM General’s plant in Mishiwaka, Ind., GM will be able to crank out 30,000 or more pickups in Wentzville to satisfy demand.
Mercedes-Benz, by the way, did the same thing recently, contracting AM General to build its R-class crossover in order to free up production capacity for other models at its plant in Alabama.
The Wentzville factory is already stretched to its limits. It has been working three shifts and on weekends, with workers even agreeing to rejigger their break times to eliminate a six-minute lull between shifts, Automotive News said.
Give GM credit for smart management.
The entire industry is seeing a small truck comeback, as Forbes contributor Micki Maynard wrote earlier this year. In addition to GM’s new models, Toyota Motor has a redesigned Tacoma pickup, and even Ford – the skeptic — is getting back into the game with a new mid-sized pickup expected by 2018.
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