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5 reasons why GM is cutting jobs, closing plants in a healthy economy

DETROIT — Even though unemployment is low, the economy is growing and U.S. auto sales are near historic highs, General Motors is cutting thousands of jobs in a major restructuring aimed at generating cash to spend on innovation. It's the new reality for automakers that are faced with the present cost of designing gas-powered cars and trucks that appeal to buyers now while at the same time preparing for a future world of electric and autonomous vehicles. GM announced Monday that it will cut as many as 14,000 workers in North America and put five plants up for possible closure as it abandons many of its car models and restructures to focus more on autonomous and electric vehicles. The reductions could amount to as much as 8 percent of GM's global workforce of 180,000 employees. The cuts mark GM's first major downsizing since shedding thousands of jobs in the Great Recession. The company also said it will stop operating two additional factories outside North America by the end of next year. The move to make GM get leaner before the next downturn likely will be followed by Ford Motor Co., which also has struggled to keep one foot in the present and another in an ambiguous future of new mobility. Ford has been slower to react, but says it will lay off an unspecified number of white-collar workers as it exits much of the car market in favor of trucks and SUVs, some of them powered by batteries. Here's a rundown of the reasons behind the cuts: Coding, not combustion CEO Mary Barra said as cars and trucks become more complex, GM will need more computer coders but fewer engineers who work on internal combustion engines. "The vehicle has become much more software-oriented" with millions of lines of code, she said. "We still need many technical resources in the company." Shedding sedans The restructuring also reflects changing North American auto markets as manufacturers continue to shift away from cars toward SUVs and trucks. In October, almost 65 percent of new vehicles sold in the U.S. were trucks or SUVs. That figure was about 50 percent cars just five years ago. GM is shedding cars largely because it doesn't make money on them, Citi analyst Itay Michaeli wrote in a note to investors. "We estimate sedans operate at a significant loss, hence the need for classic restructuring," he wrote. The reduction includes about 8,000 white-collar employees, or 15 percent of GM's North American white-collar workforce. Some will take buyouts while others will be laid off.

GM also sheds parts from its pickups to boost payload ratings

The row between Ford and Ram over who boasts the best-in-class tow rating for heavy duty pickups has revealed a number of things. Chief among them is a report that Ford removes items like the spare tire, jack, radio and center console from its vehicles in a bid to lower its base curb weight and therefore keep the truck's gross vehicle weight rating down.
For those that need a refresher, GVWR is the vehicle's curb weight plus its maximum payload. A lower GVWR allows Ford to station its F-450 among the so-called Class III pickups, despite the fact that internally, it has the makings of a more brutish Class IV truck.
Ford explains away these deletions, saying a customer could order their vehicle in such a manner. It has also come to light that Ford is not the only automaker to engage in such practices.

Average transaction prices climb to a record $36,270 in January

The automotive sector made a hash of the numbers last month, a mess of pluses and minuses clogging the transaction-price charts according to Kelley Blue Book. The overall industry rose one percent, even though buyers bought fewer cars and light vehicles in January 2018 vs 2017 using the selling-day adjusted rate. Due to January transaction prices rising to $36,270, a record for January, the value of new vehicles sold climbed more than $1 billion compared to January 2017. KBB's transaction prices don't include customer incentives, which changes the complexion slightly; average incentive spending rose to just over ten percent. The average transaction price in December 2017 was $36,756, so January dropped a bit - nothing unexpected, with the month annually blamed for "January doldrums." More revealing is the fact that the average transaction price in January 2017 was $34,910. This year's plumped-up figure came courtesy of the continued shift to crossovers, SUVs, and light trucks, which shouldn't surprise anyone who's read an automotive blog in the past 20 years. That category comprised nearly 70 percent of new vehicle sales for the month. Some manufacturers profited more than others, though. Fiat Chrysler managed 12.8 percent fewer sales in January compared year-on-year, but the company's vehicles sold for $1,300 more. The Ford brand suffered a 6.3-percent dip in sales, but brand transaction prices increased $2,000, while a Lincoln sold for $8,700 more on average. General Motors sold more cars and sold them for more money; overall GM transaction prices rose four percent, or $1,270, while a GMC traded hands for seven-percent more than in January 2017 and a Cadillac got $2,300 more on average. Of KBB's listed automakers, the Volkswagen Group got the most of out its customers, transaction prices rising at the German automaker by 5.6 percent to $42,243 in January 2018 compared to a year earlier. American Honda followed with a 4.3-percent increase to $28,991, GM in third at 4.1 percent to $40,313. Find your next car at Autoblog using our new and used car listings or the Car Finder tool. Broken out by segment, minivans rocked the table, transaction prices leaping by 7.9 percent to $35,380 compared to January a year earlier. Luxury cars boasted the next-highest rise, at 3.6 percent to $58,533.