GM to close four plants, may unload Hummer

Tue Jun 3, 2008 4:12pm EDT
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By Soyoung Kim

WILMINGTON, Del (Reuters) - General Motors Corp (GM.N: Quote) said on Tuesday it is closing four truck plants employing 10,000 workers and could sell its Hummer brand in a rushed response to higher gasoline prices that the largest U.S. automaker now sees as a permanent threat to its business.

Chief Executive Rick Wagoner, in a news conference before the annual meeting, said GM would close the four North American truck plants and add shifts at two U.S. plants making more popular and better-mileage cars to realign output with a U.S. auto market reeling from an oil shock being compared with those of the 1970s.

Wagoner said GM is reviewing its Hummer brand and could sell the military-derived SUV line, which has become synonymous with gas-guzzling excess and has hurt GM's image at a time when consumers are demanding more fuel efficiency.

"High gasoline prices are changing consumer behavior rapidly," Wagoner said. "We at GM don't think this is a spike or temporary shift. We believe that it is by and large permanent."

In a bid to lessen its reliance on the higher-margin trucks and SUVs that represent some 60 percent of its U.S. sales, GM's board approved funding for a compact car to replace the Cobalt and a new subcompact to replace the Aveo. Both Chevy-branded small cars are set to go on sale in 2010.

GM's board also gave final approval to the Volt, a heavily touted, all-electric vehicle that GM expects to have in showrooms by 2010 in a bid to beat rival Toyota Motor Corp (7203.T: Quote) to market with the kind of rechargeable car embraced by environmentalists.

GM said the latest steps would cut $1 billion from its costs by 2010, but some questioned whether they would improve the automaker's prospects in the face of a U.S. market now seen slumping well into 2009.

Wagoner said GM, which has lost a combined $51 billion over the past three years, is not ready to detail a timeline for returning to profitability.   Continued...

<p>General Motors introduces the HUMMER H3R concept during the GM Style event in Detroit, Michigan January 12, 2008. REUTERS/Rebecca Cook</p>