Why Carmakers Can't (Or Won't) Just Idle Their Plants

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This is The Morning Shift, our one-stop daily roundup of all the auto news that's actually important — all in one place at 9:30 AM. Or, you could spend all day waiting for other sites to parse it out to you one story at a time. Isn't your time more important?



E'rbody is worried about American car companies and their rising inventories. After a weak winter of sales cars are piling up, with all three companies above the industry average (which is about 89 days of supply).

The fear is that, in an effort to curb inventories, they'll start a crazy price war and cut into those sweet, sweet margins they've built up over the last few years. See folks, when car companies used to have inventory problems they'd just cut prices and move inventory until it resolved. That was a bad practice.

So why not just idle plans? I'll let the WSJ handle this one:

So far, says IHS automotive analyst Tom Libby, GM and other car makers figure "it is cheaper to offer these incentives than to shut the plants. The problem is once you turn it on, [discounting] it is hard to turn it off, and now we are looking at another challenging month with February."


Up to a point, which we may have crossed. This most notably a GM problem since they're not moving as many trucks as they need to. Ford may be stuck with production delays that could be a blessing in disguise and Chrysler isn't as bad off.


As I said on Monday, we won't know if we're over- or under-reacting until March.



There are two things Americans are apparently afraid of running out of: Salt to keep their streets from resembling the Fortress of Solitude and sweet, sweet aluminum.

Why? We're currently running out of ways to make huge leaps in fuel economy like the ones we've already made without dropping weight, and the cheapest way to drop weight is to use aluminum.


Per The Detroit News:

"There's a very simple reason for it: CAFE," said General Motors Co. spokesman Klaus-Peter Martin, referring to the U.S. government's tough new fuel economy standards. "Every gram you can take out of the vehicle, it helps with fuel efficiency."

The question now is this: Is there enough aluminum to go around?

In the near term, the answer is no.

Yep, F-150 got there first suckas.

3rd Gear: Canada Wants Your (Our) Business


Those sneaky Canadians! When not stealing our Olympic medals or framing our Muskies, they're trying to lure our carmakers there to build cars.

Specifically, they're about to spend $450 million to get car companies to relocate or expand in the country. Bloomberg reports this is especially targeted at Chrysler for projects such as the new round of minivans.


Canada's biggest problem is probably the Canadian dollar, which is now higher than the U.S. dollar has been closer (or above) the U.S. dollar recently and way ahead of the peso.

4th Gear: Toyota Recalls 713,000 Prii Over Software Glitch


The ability of the Tesla Model S to update over-the-air sounds pretty good right now if you own a Toyota Prius, with about 1.9 million of the cars being recalled worldwide over a software problem.

Specifically, the cars might have a problem with their hybrid control unit that would cause the cars to shut down and enter a failsafe mode.


If you were escaping an erupting volcano in a Prius and this happened… yada yada yada fiery death.

5th Gear: What's Up With VW?


The most curious aspect of the VW-UAW deal is that Volkswagen's actions could easily be construed as promoting the Works Council idea. Grover Norquist has made a career out of being wrong about things, but I agree with him that VW is sort of "backing" this idea despite claiming to be neutral.

From the Freep:

Volkswagen has accepted the union's "principles for fair union elections" that UAW President Bob King began discussing in 2010.

"Volkswagen may be one of the few employers — if not the first — that has ever explicitly agreed to those principles," said Gary Klotz, a labor attorney with the Detroit firm of Butzel Long. "It's almost a dream world for the UAW."


Multiple theories about why this is are out there, including the power of IG Metall or just a desire to get out ahead of the whole globalized unionization thing. It's also possible they think it won't pass and are just putting on a show.

Either way, it's curious.

Reverse: The Good Old Bad Days

On this day in 2008, in an attempt to cut costs, struggling auto giant General Motors (GM) offers buyouts to all 74,000 of its hourly employees in the U.S. represented by the United Auto Workers (UAW) union. The move came after GM lost $38.7 billion in 2007, which at the time was the largest loss ever experienced by any car maker. (Two weeks later, on February 26, the loss was adjusted by $4.6 billion, to $43.3 billion.)



Neutral: Seeing Any Strong Incentives In Your Area? Or are prices still high?

Photo Credit: Getty Images