Decline in sales postpones opening of new GM plant

Delay of up to a year for Michigan factory

May 10, 2001|By BLOOMBERG NEWS

DETROIT - General Motors Corp., the largest automaker, plans to delay by as much as a year the start of production at a new $1 billion plant near Lansing, Mich. The company blamed slower demand for cars and trucks.

The automaker was initially scheduled to begin production at the Delta Township factory in 2004, spokeswoman Renee Rashid-Merem said yesterday. General Motors is determining what models to build at the plant in view of lower industrywide sales and other market conditions.

The Detroit automaker has reduced production an average of 18 percent in the first half of the year to reduce inventories of new cars and light trucks on dealer lots. General Motors sales fell 9.1 percent in the first four months of this year to 1.54 million, and market share slid from 28.8 percent to 28.1 percent.

"We're continuing to assess the product at that plant," Rashid-Merem said. The automaker declined to comment on analyst reports that the Delta Township plant will use General Motors' Epsilon front-wheel-drive car platform in building sport-utility vehicles, rather than a more traditional truck platform.

General Motors first announced plans to build the Delta Township plant in June 2000. The factory, which will include vehicle assembly and metal stamping, is set to replace General Motors' car assembly complex in Lansing.

The new factory will join a $558 million Cadillac plant the automaker plans to open in Lansing in the fourth quarter of this year.

The assembly complex's 6,000 workers now build the Pontiac Grand Am, Oldsmobile Alero and Chevrolet Malibu. A firm date for its closing has yet to be set, according to the Lansing State Journal, which first reported the delay.

General Motors shares fell 40 cents yesterday to $55.30, but have risen 8.6 percent this year.

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