GM, Ford are downsizing. Here's why.

General Motors and Ford Motor Co. are cutting thousands of jobs as automakers are struggling with slowing sales in key markets, changing consumer vehicle preferences, and tougher environmental regulations in the United States. whole world.

Ford announced Monday that it would reduce its international white-collar workforce by 7,000 jobs as part of the company's $ 11 billion restructuring effort based in Dearborn, Michigan . Last year, GM announced the closure of several plants in North America and the elimination of 14,000 jobs.

The announcements announce the relocation of the production lines of the two largest US auto companies, while consumer interest is the focus of consumer concerns, from passenger cars to SUVs and vans.

More stringent emissions requirements imposed by countries such as China and European Union countries, coupled with a growing interest in emission-free vehicles, are accelerating the shift towards electric cars.

GM, Ford and others are also investing millions in autonomous vehicles, hoping that technology will define the future of auto production.

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Meanwhile, President Trump 's tariffs on steel and aluminum imports have cost billions of dollars. The industry benefited from a little respite after Canada and Mexico reached agreements with the US last week to raise royalties.

However, automakers investing significantly in new models, the global slowdown in sales worries analysts and other industry experts about the risk of profit loss for profit in 2019.

In China, the largest market for automakers, sales fell 14.6% in April to establish 1.98 million vehicles, according to the China Association of Automobile Manufacturers. For Ford, sales in the region fell nearly 40% in 2018, while GM's dropped 10% last year.

Both companies presented a strategy for the region to reorganize the product line. Ford plans to build a new Explorer and a Lincoln Corsair in China, a move that executives say will help cut costs.

"It's a huge improvement in terms of business model for all of them," said outgoing CFO Bob Shanks recently. "The costs of materials are lower in China, the labor force is lower in China, we can be closer to the market in terms of consumer demand."

Meanwhile, GM is gearing up to launch about 20 new or updated models in the country, including new Cadillac crossovers.

"Automakers around the world are looking at a world where global production has a greater downside risk than the upside … all the more so as we see the impact of China," Adam Jonas wrote. , Morgan Stanley analyst, in a recent research note.

Teleprinter	security	Latest	Change	% Chg
F	FORD MOTOR COMPANY	10.21	-0.07	-0.68%
GM	GENERAL MOTORS COMPANY	36.99	+0.02	+ 0.05%

There are, however, positives for domestic manufacturers. Ford and GM, for example, continue to see vigorous demand in North America for pickup trucks.

"With cheap fuel and new crossovers and pick-ups coming out … we expect a strong penetration of light trucks into the industry, which already accounts for about 70% of new vehicles sold each month", David Whiston, a Morningstar analyst, recently wrote.

GM will launch its next generation of heavy trucks in the second half of 2019. The hugely popular Ford F-150 will be the subject of a new design in 2020, the first in six years.

Tesla and the Rivian start-up, however, could lower the market share of Detroit automakers with their future 100% electric vans. In April, Ford announced it would invest $ 500 million in Amazon-funded Rivian and use its proprietary platform to build a new emission-free vehicle.

Fiat Chrysler is also putting pressure on Ford and GM, the two largest pickup truck vendors in the United States, respectively, while sales of its Ram pickup continue to increase.

Stand-alone production continues to be a priority for Ford and GM, but interest in this technology may be weakening. Half of the US population, for example, estimates that autonomous vehicles will be dangerous, up from 47% in 2018, according to Deloitte's annual consumer survey of the automotive sector.

GM is expected to launch a commercial self-driving service later this year, although executives did not want to impose a strict timetable. Ford has a longer deadline and does not intend to launch an autonomous fleet until 2021.

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Overall, the profits of two of the world's largest automakers reflect the evolution of the company.

At Ford, adjusted earnings in the first quarter were 44 cents per share, which is significantly higher than predicted on Wall Street. The company lost $ 28 million in China in the last three months of March, less than $ 150 million a year ago.