Here's another automotive story from CNN fN:
http://cnnfn.cnn.com/2000/12/18/home_auto/wires/gm_wg/
GM to cut vehicle lineup
General Motors will cut costs, reduce
80-vehicle lineup up to 20% by 2004
December 18, 2000: 4:23 p.m. ET
DETROIT (Reuters) - No. 1 automaker General Motors
Corp. on Monday said it
will reduce its 80-vehicle lineup by as much as 20
percent by 2004 and take
other cost-cutting moves, efforts analysts called long
overdue.
The plan to trim the number of vehicles it offers
follows last week's
announcement that GM would trim its global work force
by 4 percent and phase
out its storied 103-year-old Oldsmobile brand.
"What's being reduced is areas where we have overlap
and more products than
we need," GM spokesman Brian Akre said.
For example, GM will phase out the Oldsmobile Alero
mid-sized sedan, leaving
the similarly sized Pontiac Grand Am, while the
automaker also will reduce its
minivan offerings from three to two when the Oldsmobile
Silhouette disappears,
he said.
GM's stock closed the day on the New York Stock
Exchange down $1.94 to
$51.88, not far from its 52-week low of $48.44 and off
its year high of $94.63.
Analysts welcomed the move to trim the product
offerings.
"If you look at GM and compare it to
other automakers, they still have too
many products and too many vehicle
platforms," UBS Warburg analyst Saul
Rubin said.
GM also said it will set up special
teams starting Jan. 1, 2001, to work
with ideas from parts suppliers on how to save money,
letting the parts makers
keep 35 percent of savings generated by their ideas.
The plans were first
reported in the Wall Street Journal on Monday.
The automaker said its board wants non-auto business to
grow 30 percent to
$12 billion over the next three years, with some board
members pushing for $15
billion. It also is looking to shift more engineering
work to lower-cost Mexico,
insiders said.
The moves are estimated to yield cost savings of about
$100,000 per person in
wages and benefits annually for a U.S. white-collar
worker, the paper said.
Analysts said the moves, including last week's
announced staff cuts and the
death of Oldsmobile, were long overdue at an automaker
that has watched its
U.S. market share shrink drastically over the last
three decades.
"It's about time, isn't it? They're finally getting
serious," J.P. Morgan analyst
David Bradley said. "It's in line with this tougher
thinking and I think it's what
you need.
"The stock has benefited from people seeing GM getting
realistic," he added.
"The problem with GM historically, it's never been very
realistic about its own
prospects. They always tend to overestimate their own
prospects.
Last week, GM said it would cut its global work force
by nearly 4 percent,
including a reduction of 10 percent or 5,000 of its
North American white-collar
workers, as well as kill its storied Oldsmobile brand.
In response to slowing sales, GM -- like competitors
Ford Motor Co. (F:
Research, Estimates) and DaimlerChrysler AG (DCX:
Research, Estimates) --
has recently cut output at its North American vehicle
assembly plants to
reduce high vehicle inventories.
Any moves to cut costs will only help GM (GM: Research,
Estimates) during
the slowdown, analysts said.
"It fits into the whole, big initiative of taking down
their cost base," Rubin said.
"It's a relentless pursuit to wring out extra costs."
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