More Cruzes Coming From Mexico Makes Us Go Hmmm

GM announced it would be shipping more Mexican manufactured Chevy Cruzes to stores across the US in order to meet insatiable consumer demand.

WFMJ received word from Michelle M. Malcho, GM Communications, who said the company will begin using production capacity in Ramos Arizipe, Mexico to augment Lordstown’s output.

GM says Lordstown Complex is running three shifts cranking out 2016 Cruzes– adding that increased Mexican production will have no impact to work at Lordstown.

Malcho added that GM currently has enough Cruzes for 30 days, which she calls the equivalent of being sold out.

And this is the point where we go HMMM.

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Lordstown isn’t kicking out cars at nearly the rate it was this time last year–or conversely, consumers aren’t buying nearly as many Cruzes as they were this time last year.

Last year Lordstown produced 299,227 cars between the US and Canada, running at capacity 5 days a week Lordstown will churn out 25,000-27,000 cars per month.

Year to Date in 2016 the Cruze is 35 percent down compared to 2015. Couple the Cruze’s slower market pace with GM’s intentional reduction of fleet sales and it’s not possible Lordstown even remotely needs help populating dealers.

Then why?

And don’t say Japanese earthquake–GM said itself they had no inventory problems when the lights were turned back on at all affected plants over a month ago.

We’ve known for some time the even newer Cruze Hatch would arrive from Mexico, but supplementing supply of sedans to the US and Canada is interesting indeed.

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“There is no elimination of a shift.  There are no plant closings,” said UAW Local 1112 president Glenn Johnson.  “Our product is red hot and the new Chevy Cruze is just flying off the shelves and we need to meet our customers’ demands because that customer base is very essential to what we do as a business.”

However if you do a quick search of major market Chevrolet dealers you’ll quickly find the consumer demand rhetoric is just that, rhetoric:

Clearly the ‘data’ is in conflict with the official narrative.

Without getting too cynical, will GM slowly but surely leak more and more Cruze production to Ramos Arizipe? It would be completely logical from a business standpoint as rivals shift small car production to Mexico in order to maximize margins–but will certainly need to be done quietly and carefully amid the current political circus.

Getting two birds stoned at once GM also sends a warning shot across the bow of the UAW, saying we’re happy to negotiate but don’t get too cocky, we have other girls to dance with.

Of course it’s possible this is General Motors getting ready in advance of more upscale D2XX based Cadillacs and Buicks which would give GM more breathing space margin wise on models rolling out of Lordstown. But we’d hate to say told you so

 

 

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