GM Shutting Down Plants, Possibly Selling the Hummer

Pressed by high gas prices and sinking sales, GM makes sweeping changes.

ByNeal Karlinsky
January 08, 2009, 1:06 AM

June 3, 2008— -- Car manufacturing behemoth General Motors Corporation today declared America's love affair with the gas guzzling SUV officially over, announcing that it will shut down four truck plants that currently employ about 10,000 employees.

"These higher gas prices are changing consumer behavior, and rapidly," GM CEO Rick Wagoner said in a news conference.

On Monday, the Energy Department announced that average gas prices across the country are nearly $4 per gallon, and nobody seems to expect that they are coming down anytime soon.

General Motors isn't just shuttering truck and SUV plants, which have accounted for about 60 percent of its current U.S. sales. It is making a permanent shift away from the giant Hummer to something called the Chevrolet Volt, a mass produced, fully electric car.

"This is a really big deal for General Motors. It's a sea change, if you would, in terms of their product," said Rebecca Lindland who makes auto sales forecasts at GlobalInsight.

One look at the numbers explains the shift. SUV sales are falling like a rock -- down nearly 30 percent -- while small car sales are showing strong gains. Reports show that the sales of more fuel-efficient and cheap cars have helped boost overall sales for Honda and Nissan, which saw their sales increase in May, compared to last year.

General Motors believes the answer is in electric and hybrid cars, but it is not yet ready to deliver.

Analysts say the company all but ignored the potential of those cars for years.

"I think GM is moving too slow for how fast gas is changing. And I don't think that they're going to be able to react as fast as they're going to need to," said auto industry analyst Karl Edmonds.

Electric car technology is racing forward, but it is not because of the Big Three American automakers.

AFS Trinity Power showcased a technology this afternoon to modify SUVs and other vehicles so that they could be driven up to 40 miles solely on electric power, charged up by being plugged into a common electrical outlet.

"If you had 180 million cars like this, you could charge them all up overnight with the power that is excess in the power grid tonight," said Edward Furia, chairman and CEO of AFS Trinity Power, which is based in Bellevue, Wash.

Running on electric power from the AFS technology is remarkably smooth, quiet and fast, and Furia said the vehicle can also switch to become a hybrid car when the charge runs out.

If you're waiting for relief from General Motors, you'd better hang onto your gas money. The company's savior, the fuel-efficient Chevy Volt, won't be available until 2010, at the earliest.

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