GM job cuts are another sign of a future with fewer cars

If the biggest of the United States The car manufacturer's crystal ball is working, the future of cars has far fewer cars.

This is the thought that motivated the major announcement of the internal restructuring of General Motors, which took place Monday. The company plans to stop producing many compact models or sedans, including the Chevrolet Cruze, Volt and Impala, the Buick LaCrosse and the Cadillac CT6. It will close at least three badembly plants that will build these cars in Youngstown, Ohio; Oshawa, Ontario; and Detroit. And he will lay off up to 14,000 men and women, including about 8,000 employees.

For industry watchers, GM's announcement was not shocking. Signs call for automatic demotion: After three years of impressive growth, new car sales in the United States have started to decline, with badysts doubting that this year's totals will improve from the record high of 17.6 million achieved in 2016. Sales are also down in China, the largest car market in the world and a region of major importance for several automakers. In addition, GM faces an ever-changing geopolitical landscape: the Trump administration's tariff on imported steel, imposed at the beginning of the year, cost it $ 1 billion.

Note, however, that GM is reducing the number of cars – not all cars. Trucks and SUVs continue to dominate the US automotive landscape, accounting for about two-thirds of the country's sales last year. With low gasoline prices, competitive gas mileage and smooth driving, American car buyers see little reason to forgo a bigger and more flexible vehicle. Indeed, GM's partners in the Big 3 have also reduced their car production. Ford announced in April that it would almost halt car construction in North America and invest more in pickup trucks and SUVs. Fiat Chrysler started eliminating sedans in 2016. (GM officials said some laid-off workers may find work at the company's truck plants, which have to work overtime to meet the demand.)

"It was a global approach that took only one shot," says Karl Brauer, automotive industry badyst and executive publisher of Autotrader and Kelley Blue Book. "We've seen a lot of these themes from different automakers over the last 12 months. GM has everything exposed in one document. "

So, if cars are not the future of American cars, at least according to GM, what is it? He will continue to sell pickup trucks and SUVs, that's for sure. But GM's planning goes beyond what consumers are today.

"They know that in the future, it will not be about who builds the best car or the best SUV," Brauer said. "It will be a question of who is using technology as efficiently as possible."

So, while it plans to reduce annual investment spending to $ 7 billion by 2020, compared to an average of $ 8.5 billion between 2017 and 2019, GM is investing heavily in vehicle development electric and autonomous. The company announced last fall that it would launch 20 new models of electric batteries in North America by 2023, and at least 10 in China by 2020. Brauer notes that the GM's decision to discontinue the Volt electric battery could be more related to the shape of the car than its transmission. . The automaker introduced a crossover vehicle, the Buick Velite 6, at the Shanghai Auto Show in April and announced plans to start selling the vehicle in China next year. It could arrive in the United States soon after.

Meanwhile, Cruise, the GM autonomous driving unit acquired in 2016, announced earlier this month that it would open a new office in Seattle. In the spring, CEO Kyle Vogt said the company was increasing its workforce by 40% each quarter. A $ 2.25 billion investment by the Softbank Vision Fund, announced in May, also boosted (and financed) development in the country.

Once their technology is ready to be deployed – GM promises that a commercial service will be launched somewhere in 2019 – all sorts of thorny issues remain. The arrival of more electric and connected cars only makes things more complex. Will the builder understand how to use the data feeds from a connected car to enhance the customer experience or even sell items to people? Will it be the best commercial model for driverless cars, once they can operate in a city or seven? Will it create enough infrastructure to make electric cars widely available? Answer these questions and you'll know if the builder will survive in the coming decades.

But to go into the future, you have to sell vehicles now. And GM seems to believe that Americans will want big, not small, for the next decade. The present is clear. the distant future, where robotaxie roams the streets, is also clear. This is the tricky middle part that GM will have to face.

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