General Motors Company
) has decided against keeping the Chevrolet Cruze factory in
Lordstown, Ohio, closed during the week of Aug 26. The automaker
will add a week of production in the plant owing to the
incremental demand for this compact car in the U.S.
Initially, General Motors had declared a weeklong shutdown of the
plant during the said week. However, the workers will now be
working normally to catch up with the higher demand for Cruze.
Chevrolet Cruze was launched in 2009, the same year when General
Motors came out of bankruptcy protection. The present model of
Cruze is being assembled at Lordstown plant since Sep 2010. The
Lordstown plant provides employment to 4,500 hourly and salaried
General Motors' total sales in July escalated 16.3% to 234,071
units, Chevrolet sales rose 17.1% to 162,670 units.
Year-over-year increase in Chevrolet sales was driven by higher
sales volume of Spark, Cruze and Impala. The sales volume of
Cruze jumped 70% in July. Further, during the first seven months
of 2013, U.S sales of Cruze increased 24%.
General Motors and several other automakers including
Ford Motor Company
) and Chrysler Group LLC were forced to suspend production at
several plants during the global financial crisis. With the
recovery of the overall situation, the automakers are enhancing
their production capacity to meet up the growing demand.
In May 2013, Ford announced that it will be enhancing its
capacity in North America by an additional 200,000 units this
year. Ford also reduced the summer shutdown to one week in 20
plants, including six assembly plants, in order to increase
production by 40,000 units. Ford had augmented its capacity by
400,000 units last year as well.
However, recalls of the Chevrolet Cruze are a matter of concern
for General Motors. Recently, General Motors recalled its 2011
and 2013 Chevrolet Cruze cars in the U.S. to fix a problem in the
power-assisted brakes. This is the eighth recall for Cruze since
its launch. Around 230,000 cars are estimated to be recalled by
While safety advocates are worried about the high number of
recalls, Cruze continues to be popular. It was the third
ranked compact car in terms of sales in July.
Honda Motor Co., Ltd
) Civic and
Toyota Motor Corporation
) Corolla occupied the first two spots.
General Motors carries a Zacks Rank #2 (Buy).
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