GM to shut down medium-duty truck production

GM to shut down medium-duty truck production

In a terse, two-sentence statement, General Motors said today it would permanently close the doors on its medium-duty operations by mid-summer. "After four years of working with multiple potential buyers, GM has decided to wind-down its medium-duty truck operations," the company said in a press release."

In a terse, two-sentence statement, General Motors said today it would permanently close the doors on its medium-duty operations by mid-summer.

"After four years of working with multiple potential buyers, GM has decided to wind-down its medium-duty truck operations," the company said in a press release." Production of the Chevy Kodiak and GMC Topkick medium duty trucks will cease by July 31, 2009."

The news of the complete shutdown surprised some industry observers, who felt the size and scope of GM's medium-duty presence in the U.S. truck should have attracted a buyer.

"This is a shock," Eric Starks, president of research firm FTR Associates, told FleetOwner. "We knew GM had to do some drastic things to save money, to improve cash flow, so curtailing its medium-duty production would not have been a surprise. But if they are truly shutting down their medium-duty production, that's a surprise."

Others feel, however, that GM missed the opportunity to sell its medium-duty business some time ago -- and with truck sales so poor and credit so tight now, buyers are nonexistent.

"At this point, it should really surprise no one," Chris Brady, president of Commercial Motor Vehicle Consulting (CMVC), told FleetOwner. "They should have sold that business 10, even 15 years ago. Now, with truck sales down and capital hard to raise, it should surprise no one they couldn't sell it. GM missed the window."

"If the market to sell trucks isn't there for GM, it wouldn't be there for another buyer either," noted Darry Stuart, president of consulting firm DWS Fleet Management.

He told FleetOwner that's one reason Navistar may have dropped its earlier bid to buy that segment of GM's business. "Why go buy that business for market share if it's going to dry up and you're going to get that market share anyway?" he added.

FTR's Starks said GM's exit from the medium-duty truck market is going to have long-term rather than immediate ramifications.

"There's a lot of excess [truck production] capacity in the market already, so stopping production won't have much impact now," he explained. "But it's one to two years from now that this is really going to be felt. GM is such a big player in the medium-duty market that their exit is going to open up a lot of opportunity, especially for a lot of smaller, offshore [truck] OEMs."

"This is definitely going to open up opportunities for other OEMs to gain customers," added CMVC's Brady.

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