General Motors Company (GM) plans to suspend the production of Chevrolet Volt in the Michigan assembly plant from the middle of September to the middle of October, according to sources. The plant will also shelve the production of Chevrolet Malibu sedan during this period. The temporary halt in production for the second time this year is due to the over supply of the Volts.
The strategy has been adopted by General Motors to control the inventory, thus matching the market demand and supply of Chevrolet Volt. In addition, this will also enable the company to make arrangements for the production of new 2014 Chevrolet Impala.
Around 1,200 hourly workers of the plant will be given unemployment compensation for the period. The amount involved would be about 90% of their normal pay. Meanwhile, the company did not provide any specific guidance regarding the increase in number of employees required for the production of 2014 Chevrolet Impala.
General Motors, in the second quarter of 2012, registered a 41% decline in its profit to $1.49 billion or 90 cents per share from $2.52 billion or $1.54 in the corresponding quarter of 2011. Nevertheless, earnings per share exceeded the Zacks Consensus Estimate by 15 cents.
Total revenues fell 4.5% year over year to $37.60 billion in the quarter, missing the Zacks Consensus Estimate of $37.98 billion. The declines in the profit and revenues were attributable to strengthening of U.S. dollar against most of the major currencies as well as weak macroeconomic conditions globally, especially in Europe and South America.
Detroit-based General Motors is the largest automobile manufacturer in the world and one of the ‘Big Three’ U.S. automakers. The company benefits from its business presence in almost 120 countries and facilities located in 31 countries. However, like its competitor Ford Motor Co. (F), the company's significant exposure to troubled Europe has adversely affected its operations in the continent.
Currently, General Motors retains a Zacks #3 Rank, which translates into a short-term Hold rating.
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