GM wants to miss some sales in the name of profits

Article by Christian A., on August 26, 2010

Apparently, General Motors Co. is prioritizing profit over sales as it raises the output from its existing plants rather than restarting idle plants. GM does this despite signs that the economy will recover this year and that GM's forecast could be exceeded. Dealers are also coping with the fact that it doesn't have as many ready-to-sell vehicles in their lots.

GM used to keep factories operating at all costs. GM has seen the advantages of having lean inventories. 

These include low incentives; better brand values; and annual profits. Mike DiGiovanni, GM's top sales analyst, said that in the short-term, the tighter alignment of production and demand could cost a few sales but that eventually, it will build the brands.

By doing so, the residual values will go up, people will pay more for the cars and this will also enhance the image of the brand, making it gain more market share.

To cope with demand while at the same time keeping costs to a minimum, GM will by spring have five of its 16 operational North American plants working at more than a 100% capacity with two standard shifts, five days per week. [via autonews]

Topics: gm, profit

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