GM to pare eighty vehicles from line-up

From: Richard A Pyburn (rap777@juno.com)
Date: Mon Dec 18 2000 - 16:51:14 EST


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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