Doors open as GM closes

July 1, 2009
Saying General Motors missed the boat, some experts, while expressing surprise that GM decided to cease production of its medium-duty operations, see an opening for other OEMs to grab market share in the U.S. There's a lot of excess [truck production] capacity in the market already, so stopping production won't have much impact now, Eric Starks, president of research firm FTR Associates, told Fleet

Saying General Motors missed the boat, some experts, while expressing surprise that GM decided to cease production of its medium-duty operations, see an opening for other OEMs to grab market share in the U.S. “There's a lot of excess [truck production] capacity in the market already, so stopping production won't have much impact now,” Eric Starks, president of research firm FTR Associates, told Fleet Owner. “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.”

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

“This is definitely going to open up opportunities for other OEMs to gain customers,” Chris Brady, president of Commercial Motor Vehicle Consulting, said.

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 market should have attracted a buyer. “This is a shock,” Starks said. “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…truly shutting down their medium-duty production, that's a surprise.”

“At this point, it should really surprise no one,” said Brady. “They should have sold that business ten, even fifteen 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 Fleet Owner that's one reason Navistar may have dropped its earlier bid to buy the 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.

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